15th Finance Commission may cut states' share, suggest more spending on public health

The 15th Finance Commission (FFC), headed by Chairman N K Singh, will present its final report to President Ram Nath Kovind on Monday (November 9).

One of the key things to watch out for in the report of the FFC is the share to states in the pool of taxes. The states’ share was cut from 42% to 41% in the interim report for 2020-21, and it is likely to stay that way. The cut is due to the creation of two new Union Territories, Jammu and Kashmir and Ladakh.

Among other parameters, it has considered a new 12.5% weightage for “demographic performance” while fixing the devolution formula, according to The Economic Times.

Related news: Govt extends 15th Finance Commission’s term by a month till Nov 30

The ET report said, the FFC has also recommended setting up of a non-lapsable Modernisation of Defence and Internal Security Fund (MDISF), to be called Rashtriya Suraksha Naivedyam Kosh. During 2021-26, the fund is estimated to add up to about ₹2.4 lakh crore.

As per a report in Hindustan Times, the FFC may make historic recommendations in the area of public health care. For the first time, it will contain a chapter on public health care in the country, health infrastructure and spending.

In an interview to Hindustan Times in July, Singh had suggested that the FFC was working towards a financing model to raise federal public-health spending to about 2.1% of the country’s gross domestic product (GDP) over the next five years. The total expenditure on health by the Centre and states for 2019-20 was ₹ 2.6 lakh crore, or just 1.29% of GDP, which is lower than most peer nations.

The FFC will also present a copy of the report to Prime Minister Narendra Modi later this month.

The report will be tabled in Parliament by the Union Finance Minister along with an Action Taken Report of the Government of India. The Report contains recommendations pertaining to five financial years, 2021-22 to 2025-26. The report for the year 2020-21, presented to the President in December 2019, was tabled by the government in the Parliament along with an Action Taken Report.

Earlier, on October 30, the FFC concluded its deliberations on the report for the year 2021-2022 to 2025-2026. The report was signed by Singh, and, members of the commission, Ajay Narayan Jha, Prof. Anoop Singh, Dr. Ashok Lahiri and Dr. Ramesh Chand.

The commission finalised its report after wide-ranging consultations with the Union and state governments, local governments at different tiers, Chairmen and Members of previous Finance Commissions, Advisory Council to the Commission and other domain experts, academic institutions of eminence and multi-lateral institutions, the FFC said.