Article 280 Current Affairs - 2020

Fifteenth Finance Commission meets to discuss Health Sector and Fiscal Consolidation

On May 21, 2020, the Fifteenth Finance Commission met to discuss health sector and fiscal consolidation in the country.

Highlights

A high-level group was constituted by the Finance Commission on health sector. The group had submitted its report August 2019. Some of its recommendations were incorporated in the first report of the Finance Commission for the year 2020-21. The group has now been asked to recommend measures to contain the spread of COVID-19.

Role of the Group

The group will create a road map of fiscal consolidation for the GoI for the fiscal years 2021-22 to 2025-26. The group will focus on the extraordinary situation caused by COVID-19 and its economic impacts.

Now, there is a necessity to reassess the original recommendations made by the Commission especially in the health sector. The fiscal consolidation will mainly focus on medical equipment, hospital infrastructure, etc.

Fifteenth Finance Commission

The Fifteenth Finance commission recommended that the vertical devolution be reduced from 42% to 41%. Vertical devolution is the share of tax revenue that is shared by the centre with the states.

This Finance Commission had added demographic performance as new parameter in framing vertical devolution. The additional criterion of demography was included to adopt the population data from 2011 census.

About FC

The Finance Commissions are constituted under Article 280 of Constitution of India. It is constituted by the President of India every fifth year. The recommendations made by the Finance Commission are advisory in nature. The FC makes recommendations for a duration of 5 years

15th Finance Commission to monitor COVID-19 before second report

On March 19, 2020, the Finance Commission announced that it will monitor situation of COVID-19 before releasing its second report.

Highlights

The Commission is to set up a committee to review fiscal consolidation of the government. The commission has recommended grants for health sector under its report. It has recommended setting up of State Disaster Risk Management Fund and National Disaster Risk Management Fund. This will replace the existing Disaster Relief Funds both at centre and state level. This is being done to give larger priority to disaster management, mitigation, relief and response.

Finance Commission

The Finance Commission was set by President of India in 1951 under Article 280. The commission makes recommendation to distribute taxes between centre and state. It is an autonomous body. The main aim of the finance commission is to address the vertical and horizontal imbalances between the centre and the states.

The Finance Commission (Miscellaneous) Act, 1951 defines qualification, disqualification, eligibility, terms and powers of Finance Commission.