22 February 2021 THE HINDU EDITOIAL

 Navigating the storm: On the Fifteenth Finance Commission

The Fifteenth Finance Commission has adapted well to swiftly shifting sands

The Fifteenth Finance Commission has adapted well to swiftly shifting sands

 Apair of balanced scales representing the Union of India and the States, the cover visual of the Fifteenth Finance Commission’s report for the period 2021-22 to 2025-26, seeks to highlight the Commission’s endeavour to maintain an equitable approach at a time when the Centre and States are facing unprecedented revenue stress and fiscal demands. The Centre has accepted much of the Commission’s broad recommendations, including giving States a 41% share of the divisible pool of taxes and revenue deficit grants of nearly ₹2.95-lakh crore for 17 States over the next five years. It has also acceded to the Commission’s suggestion to make grants towards urban and rural local bodies conditional upon States setting up their own finance commissions and publishing online the accounts of local bodies. And 60% of these grants will be further linked to these bodies’ providing sanitation and water services. There is an ‘in-principle’ nod to the panel’s suggestion to set up a non-lapsable dedicated fund to support defence and internal security modernisation — a response to the Centre’s belated request to examine if such a fund can be considered for funding defence capex beyond normal Budget allocations. While the panel has suggested moving ₹1.53-lakh crore out of the Consolidated Fund of India over five years to partly finance this, the Centre has said the funding nitty-gritties will be examined later. States would monitor how the modalities here evolve, even as they have reason to fret about the Centre’s non-committal response to the Commission’s recommendations of sector-specific and other grants for them adding up to about ₹1.8-lakh crore.

It is up to the Centre now to ensure that States do not feel short-changed from the new fiscal framework, given their frayed ties over GST compensation dues. States have also been steadily losing out, given the Centre’s penchant to raise more cesses and surcharges that do not have to be shared. This Budget has seen an encore with the agriculture infrastructure development cess. One wishes the Commission had at least noted its displeasure on this practice, like its predecessors did. Unlike them, however, the N.K. Singh-led panel had to cope with a tumultuous shift in the domestic and global macro-economic landscape. At home, the Planning Commission was dissolved and GST introduced. The panel’s tenure was extended by a year, requiring it to give an interim report first, with its work culminating in a virtual zero-visibility zone as the COVID-19 pandemic broke out months before its deadline. Given these pressures and the difficulties in projecting the economy’s path, the Commission has done well. It has resisted the Centre’s nudge to review what it felt was a too-generous 42% share granted to States by the previous Commission, and deftly dealt with most of the unusual terms of reference foisted on it. As N.T. Rama Rao said, India lives in the States. If the Centre takes them along, it might help attain the balance envisaged by the Commission, which is needed to drive the country onto a double-engine growth trajectory from the current nadir.

1. navigate (verb) – lead, helm, steer, manage.
2. storm (noun) – trouble, disturbance, controversy.
3. Finance Commission (noun) – It is a Constitutionally mandated body that is at the centre of fiscal federalism. Set up under Article 280 of the Constitution of India, its core responsibility is to evaluate the state of finances of the Union and State Governments, recommend the sharing of taxes between them, lay down the principles determining the distribution of these taxes among States. The first Finance Commission was set up in 1951 and there have been fifteen so far.
4. Fifteenth Finance Commission (noun) – The Fifteenth Finance Commission was constituted on 27 November 2017 against the backdrop of the abolition of the Planning Commission (as also of the distinction between Plan and non-Plan expenditure) and the introduction of the goods and services tax (GST), which has fundamentally redefined federal fiscal relations. It is constituted to give recommendations for devolution of taxes and other fiscal matters for five fiscal years, commencing 01.04.2020.
5. swiftly (adverb) – rapidly, quickly.
6. shifting sands (phrase) – used to refer to something that is constantly changing, especially unexpectedly.
7. scale (noun) – a device/instrument for weighing; weighing machine, balance, pair of scales.
8. seek (verb) – try, aim, attempt.
9. highlight (verb) – underline, underscore, emphasize, call attention to.
10. endeavour (noun) – प्रयास--activity, pursuit, exercise, undertaking, mission; aim/effort.
11. equitable (adjective) –न्यायसंगत-- fair, just, impartial.
12. unprecedented (adjective) – not done or experienced before.
13. stress (noun) – pressure, tension, strain, tightness. 
14. divisible pool (noun) – the taxes of the central government that it should share with the state governments in accordance with the recommendations of the Finance Commission.
15. revenue deficit (noun) – it arises when the government’s revenue expenditure exceeds the total revenue receipts.
16. revenue deficit grant (noun) – The grant (allocation-a sum of money given by a government) is awarded by the Finance Commission. The grant is awarded to States that bear the burden of persistent deficit for bridging the revenue and expenditure gap.
17. accede to (verb) – agree to, consent to, accept.स्वीकार कर लिया
18. conditional (adjective) – subject to, dependent on, depending on.
19. set up (phrasal verb) – establish, start/begin, inaugurate, create.
20. sanitation (noun) – it generally refers to the provision of facilities and services for the safe disposal of human urine and faeces (Courtesy: WHO).स्वच्छता
21. in principle (phrase) – in theory, theoretically, on paper.
22. nod (noun) – approval, acknowledgement.
23. non-lapsable fund (noun) – it means the unspent amount from capital budget of the ministry will not lapse (revert/surrender back to the ministry if not consumed), and will continue (carry forward) in the next fiscal (financial year).
24. modernisation (noun) – improvement, refurbishment, remodeling, revamping.
25. belated (adjective) – late, behind time, not on time/delayed.देर में आया हुआ
26. capital spending/capital expenditure (CAPEX) (noun) – the money spent on the acquisition of assets like land, buildings, machinery, equipment, as well as investment in shares.
27. Consolidated Fund of India (noun) – All revenues received by the Government by way of taxes like Income Tax, Central Excise, Customs and other receipts flowing to the Government in connection with the conduct of Government business i.e. Non-Tax Revenues are credited into the Consolidated Fund constituted under Article 266 (1) of the Constitution of India. Similarly, all loans raised by the Government by issue of Public notifications, treasury bills (internal debt) and loans obtained from foreign governments and international institutions (external debt) are credited into this fund. All expenditure of the government is incurred from this fund and no amount can be withdrawn from the Fund without authorization from the Parliament. (Courtesy: ccaind.nic.in)समेकित
28. the nitty-gritty (noun) – basics, essentials, main point.
29. modality (noun) – a particular method or procedure.
30. evolve (verb) – develop, progress, advance, move forward.विकसित करना
31. fret (verb) – worry, be anxious, feel uneasy, be distressed, be upset, feel unhappy.झल्लाहट
32. non-committal (adjective) – evasive, equivocal/undecided, circumspect; dodge the question, sidestep the issue.दफ़न
33. up to (phrase) – indicating a maximum amount.
34. up to (phrase) – the responsibility, duty of someone.
35. shortchange (verb) – swindle, defraud, deceive, trick.
36. fiscal (adjective) – financial.
37. framework (noun) – structure, system, organization.
38. given (preposition) – considering, taking into consideration, taking into account, in view of, bearing in mind.
39. तौर-तरीकों--
    modalities
40. frayed (adjective) – strained, stressed, fraught, overtaxed.अस्तव्यस्त
41. ties (noun) – bond, connection, association, relationship.--
42. तेजी से--steadily 
43. compensation (noun) – payment, repayment, settlement (for loss/damage). 
44. GST Compensation (noun) – Under the GST law (In India), state governments are guaranteed full compensation for any revenue loss for the first five years after the introduction of the goods and services tax (GST) in July 2017. The compensation is a gap between actual revenue collected and projected revenue.
45. dues (noun) – payment (which is (long) pending).
46. lose out (phrasal verb) – fail to benefit from, be disadvantaged, be deprived of; suffer defeat, be the loser.
47. penchant (noun) – desire, inclination, preference.लगन
48. cess (noun) – a form of tax charged/levied over and above the base tax liability of a taxpayer. A cess is usually imposed additionally when the state or the central government looks to raise funds for specific purposes.उपकर
49. surcharge (noun) – an additional or extra charge or tax. It is essentially a tax levied on a tax. It is calculated on payable tax, not on income generated. So a surcharge of, say, 10 per cent on an existing tax rate of 30 per cent effectively raises the total tax rate to 33%.
50. encore (noun) – repeat/extra performance, additional performance, replay, repeat, repetition.दोहराना
51. infrastructure (noun) – the basic physical or organisational structure or framework that a country or organization needs in order to function properly. For a whole nation, it includes all the physical systems such as buildings, roads & railways networks, utilities, etc.
52. infrastructure (noun) – structures and facilities (e.g. buildings, roads, & etc).
53. displeasure (noun) – dissatisfaction, disfavour, discontentment.
54. predecessor (noun) – previous holder of the post; forerunner, precursor, antecedent.
55. tumultuous (adjective) – stormy, turbulent, volatile; out of control.उतार-चढ़ाव भरे
56. macro-economic (adjective) – relating to the branch of economics concerned with large-scale factors (interest rates/national productivity).
57. landscape (noun) – the distinctive features of a field of activity.
58. The Planning Commission (noun) – The Planning Commission was an institution in the Government of India established in 1950, which formulated India’s Five-Year Plans, among other functions to oversee the country’s economic and social development. The Planning Commission was replaced by NITI Aayog (National Institution for Transforming India) in 2015 to act as a think tank. (think tank is a panel of experts who provide advice and ideas on political, social or economic issues).
59. dissolve (verb) – dismiss, disestablish, disband, abolish.
60. tenure (noun) – incumbency, a term of office, a period in office.
61. interim (adjective) – provisional, temporary, transitional.  
62. culminate (verb) – come to an end with, finish with, conclude with, terminate with.समापन
63. virtual (adjective) – effective, practical.
64. resisted --विरोध
65. zero-visibility (noun) – absolutely no visibility due to darkness, poor weather, etc.
66. pandemic (noun) – the worldwide spread of a new disease; The illness spreads around the world and typically affects a large number of people across a wide area.
67. break out (phrasal verb) – flare up, begin/start suddenly, erupt, burst out.
68. nudge (noun) – encouragement, prompting, push.
69. generous (adjective) – open-handed, free-handed, bountiful, large, huge.
70. deftly (adverb) – cleverly, proficiently, skillfully.
    चतुराई से
    
    
71. terms of reference (ToR) (noun) – Terms of reference define the purpose and structures of a project, committee, meeting, negotiation, or any similar collection of people who have agreed to work together to accomplish a shared goal.
72. foist (verb) – impose, force, thrust; burden someone with.थोपे
73. envisage (verb) – foresee, predict, forecast, anticipate, expect.
74. “double engine” government theory (phrase) – the concept behind “double engine” governments is that the same party (in this case BJP) should be in power in the state and at the Centre.परिकल्पित
75. trajectory (noun) – track/course, route, path, direction, approach.प्रक्षेपवक्र
76. nadir (noun) – the lowest point, the all-time low, the bottom.पतन,घटती