Article 280 of the Constitution states that the President of India shall constitute a Finance Commission which should consist of a chairperson and 4 other members (A total – 05) at the expiration of every fifth year or at a such earlier time as the President considers necessary.

According to article 280 of the Indian Constitution, the Finance Commission is a quasi-judicial body i.e., its recommendations are only advisory and hence, not binding on the government.

Main purpose of FC is to make recommendations to the President of India in the following matters:

• The distribution of net proceeds of the taxes which needs to be shared between the Centre and states and the allocation among the states.
• The principles which should govern the grants-in-aid to the states by the Centre (i.e., out of the Consolidated Fund of India).
• The measures needed to augment the consolidated fund of a state to supplement the resources of the panchayats and the municipalities in the state on the basis of the recommendations made by the State Finance Commission.
• Any other matter referred to it by the President in the interests of sound finance.

Members of the 15th Finance Commission.

 NOTE: As Mr. Shaktikanta Das, IAS became the New RBI governor hence Mr. Ajay Narayan Jha, IAS have replaced himin the members of the Finance Commission.

Why in News?

Recently, the Fifteenth Finance Commission submitted its report with recommendations for the financial year 2020-21.

15^th Finance Commission needs to submit two reports:

• The 1^st report, consisting of recommendations for the financial year 2020-21, was presented in parliament on 1^st Feb 2020.
• The final report will be tabled by October 30, 2020 which will be considering the recommendations for 2021-26 period.

15th FC was to submit its report for period 2020-2025. However, its term was extended last year in November 2019. Due to some following reasons committee didn’t got satisfactory result:

• Political disturbance in Maharashtra.
• Major fiscal/budgetary reforms were introduced by the Union Government like closure of the Planning Commission and its replacement by   NITI Aayog.
• Removal of distinction between Plan and Non-Plan expenditure.
• Introduction of GST and New FRBM architecture with debt and fiscal deficit path the

Apart from present interim report, FC will be submitting its second  report  for  2021-22  to  2025-26  in October

However, the commission has increased the disaster relief and revenue deficit grant to states and brought back the performance-based incentives for states undertaking agriculture reforms and reducing pollution. The Constitution anticipates the Finance Commission as India’s balancing wheel of fiscal federalism.

The commission highlighted some challenges with the implementation of the Goods and Services Tax (GST):

• Heavy shortfall in the collection of tax as compared to the original forecast.
• High volatility in collections
• Accumulation of large integrated GST credit
• Glitches in invoice and input tax matching
• Delay in refunds

The formula that decides a state-wise share:

Key Recommendations of the 15th FC Report (2020-2021):

Following the recommendations, Finance Minister Ms. Nirmala Sitharaman said in her budget speech that formulating and implementing plans to ensure cleaner air in cities with more than one million population would be encouraged.

• Devolution of taxes to states: Reduction in the share of states in the divisible pool of central taxes from 42% to 41% during the 2015-20 period. The proposed change in coverage of the period will help medium-term resource planning for the state governments and the central government.
• The 1% decrease in taxes is to provide for newly formed Union Territories of Jammu and Kashmir and Ladakh from the resources of the central government.
• Reintroducing the performance-based incentives for states on 2 parameters:
• Demographic performance (based on Total Fertility Rate)
• Taxation efforts.
• Rationalization of centrally sponsored schemes and Centre and states should fully reveal their off-budget borrowings. Both the Centre and state governments should make full disclosure of extra-budgetary borrowings.
• An overarching fiscal framework for Centre & states, on lines of FRBM (Fiscal Reform Budget Management) Act (to lay down accounting, budgeting and auditing standards) needs to be followed at all levels of government.
• Enhanced devolution to local bodies compared to 14thFC.
• To form an expert group or committee to draft legislation to provide a statutory framework for the sound public financial management system.

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In the simplest terms, 5G is a new cellular standard. Now Phone carriers will jump to a new wireless standard called 5G. About 10 years ago, 4G, the fourth-generation network, arrived with significantly faster speeds and stronger reliability than 3G. About a decade before that, 3G arrived and that was much faster and more robust than 2G.

What is 5G (5th Generation)?

• It is the latest technology in the mobile network after 4G.
• This will support very high internet speed can also help an AI.
• It will not only help in connecting peoples but also interconnect and control machines, objects, and devices. 
• Using 5G, machines can sync very fast and respond to another machine or machine programming.
• This will not only boost the mobile sector but other sectors also like cars with AI (driverless), Robots, etc.
• According to TRAI, this will run on 3,300 to 3,600 Mhz frequency band and expected to the primary band.

How 5G can be used?

• To enjoy the benefits of the 5th generation mobile network, one has to buy a new smartphone that supports 5G.
• According to Qualcomm(a wireless chipmaker), the speed of 5G will be around 4.5 Gbps.
• At the initial stage, its speed will be 1.4 Gbps.
• To get the benefits of 5G, users will have to buy new phones, while carriers will need to install new transmission equipment to offer faster service.

Features of 5G

• Speed: Its speed can reach up to 4.5 Gbps. That means you can download a movie within seconds.
• Latency: Will reduce down to a few seconds, the meaning of latency is sync time between two commands of the device to the network.
• The highest-quality VR applications now typically require bulky headsets that are connected by wire to nearby personal computers that generate 3-D images.

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