15th Finance commission & IFFSCA

• Vaid's ICS, Lucknow
• 30, Oct 2020

Topics: GS II (Constitutional Bodies) /Pre & Main

Why in News? The Chairman Shri N.K Singh and Members of the 15th Finance Commission had recently held a virtual meeting with the Chairmen of previous Finance Commissions.

They discussed the roles of Finance Commission in the past & the challenges faced by it during covid-19.

About the 15th Finance Commission:

• Under Article 280(1),Finance Commission will be made up of a Chairman and four other members to be appointed by the President.
• On November 27, 2017, N.K. Singh was appointed the chairman of the 15th Finance Commission.
• Nk Singh has been a former Secretary to the Government of India and a member of the Rajya Sabha from Bihar till 2008-2014.

The other 4 members include Shaktikanta Das (former Secretary to the Government of India) and Dr. Anoop Singh (Assistant Professor, Georgetown University, Washington DC, USA), full-time member and Dr. Ashok Lahiri (Chairman, Bandhan Bank) and Dr. Ramesh. Chandra (Member, NITI Aayog) has been nominated as its part-time.

Challenges/Issues:

• Considering the use of 2011 census as the basis for resources allocation between states is the most serious issue (presently, 1971 census is being used).
• Lower population growth is inherently linked to “lower fertility rates”, which is a consequence of better education, health services and development.
• Hence, it is seemingly apparent that the states that have progressed faster are being penalised for their successes in developmental initiatives.
• Funds for southern states might get stifled as their family planning initiatives have almost stabilized their populations.
• Even West Bengal and North Eastern states have had considerable success in population control and might thereby see their share of allocations reduced.
• In contrast, some northern states continue to see a burgeoning trend in their population with little control, which might enhance fund allocations for them.
• This creates inter-state tensions, which is adding to the already existing cultural tensions between the northern and southern states.
• Finance Commission is a constitutional body for the purpose of allocation of certain revenue resources between the Union and the State Governments.
• It was established under Article 280 of the Indian Constitution by the Indian President.
• It was created to define the financial relations between the Centre and the states.
• It was formed in 1951.
• Recommending to the President of India how to distribute the net receipts of taxes between the Union and the States and the allocation of such proceeds among the States.
• States should be given grants / assistance out of the accumulated funds under Article 275.
• Recommending necessary steps for augmenting the State's Consolidated Fund for the supply of resources of Panchayats and Municipalities based on the recommendations made by the State Finance Commission.
• The Commission submits its report to the President, which is kept by the President in both houses of Parliament.
• Along with the recommendations presented, a memorandum of clarification is also maintained so that action can be taken in relation to each recommendation.
• The recommendations made by the Finance Commission are of an advisory nature, it is up to the government to believe it or not.

Topic: GS III (Financial Market) /Prelims and Mains

Why in News?

The International Financial Services Center Authority approved two regulations

1. International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020.
2. International Financial Services Centres Authority (Global In-House Centres) Regulations, 2020.

About the IFFSCA:

It was set up in 2019

Functions :

• To regulate financial products (such as securities, deposits or contracts of insurance), financial services, and financial institutions which have been previously approved by any appropriate regulator (such as RBI or SEBI).
• The appropriate regulators are listed in a Schedule to the Bill and include the RBI, SEBI, IRDAI, and PFRDA.

Composition:

IFFSCA will consist of nine members, appointed by the central government.

Members of the Authority will include:

• the Chairperson,
• One member each to be nominated from the RBI, SEBI, IRDAI, and the Pension Fund Regulatory and Development Authority (PFRDA),
• Two members from among officials of the Ministry of Finance, and
• Two members to be appointed on the recommendation of a Search Committee.
• Members will have a term of three years, subject to reappointment.

International Financial Services Center Authority (Bullion Exchange) Regulations, 2020:

• The Government of India, on the recommendation of IFSCA, notified the bullion spot delivery contract and bullion depository receipt (with bullion as underlying) as Financial Products and related services as Financial Services under the IFSCA Act, 2019 on August 31, 2020.
• IFSCA has been tasked with the responsibility of operationalization of this bullion Exchange. For the first time in India a single regulator will be regulating both the bullion spot and derivative contracts that would be traded on the Exchange.

International Financial Services Centres Authority (Global In-House Centres) Regulations, 2020:

On October 16, 2020, Government of India, on the recommendation of IFSCA, had notified Global In-House Centres (GIC) as financial service to provide services relating to financial products and financial services.

National Program and Project Management Policy Framework’ (NPMPF):

It was recently launched by NITI Aayog and Quality Council of India (QCI).

The framework envisages to bring radical reforms in the way infrastructure projects are executed in India.

It has an action plan to:

1. Adopt a program and project management approach to infra development.
2. Institutionalize and promote the profession of program and project management and build a workforce of such professionals.
3. Enhance institutional capacity and capability of professionals.