The 13th Finance Commission Chairman: Dr. Vijay Kelkar

The 13th Finance Commission, constituted in 2007, played a significant role in shaping India’s fiscal landscape. Presided over by Dr. Vijay Kelkar, a distinguished economist and administrator, the Commission’s recommendations covered the period from 2010-11 to 2014-15. Its primary mandate was to review the fiscal situation of the Union and State Governments and suggest measures for maintaining a stable and sustainable fiscal environment.

Dr. Kelkar brought considerable expertise to the role. Prior to his appointment, he served as Finance Secretary and Advisor to the Finance Minister, gaining extensive experience in economic policy and public finance. He also held positions in international organizations and academic institutions, giving him a broad perspective on global economic trends and challenges.

One of the key achievements of the 13th Finance Commission was its emphasis on fiscal consolidation. Recognizing the rising levels of government debt, the Commission proposed a roadmap for both the Union and State Governments to reduce their fiscal deficits. This roadmap involved setting specific targets for deficit reduction and encouraging states to adopt responsible fiscal management practices. The Commission advocated for a gradual but sustained approach to fiscal consolidation, recognizing the need to balance fiscal discipline with the requirements of economic growth and social development.

Another important aspect of the Commission’s recommendations was its focus on improving the quality of public spending. It emphasized the need for greater efficiency and accountability in government programs and advocated for reforms in budget management and financial administration. The Commission also recommended measures to strengthen local governments and empower them to deliver essential services effectively. It suggested increasing the share of grants devolved to local bodies, thereby providing them with greater resources to address local needs.

Furthermore, the 13th Finance Commission addressed the issue of vertical and horizontal tax devolution. Vertical devolution refers to the sharing of tax revenue between the Union and State Governments, while horizontal devolution refers to the distribution of tax revenue among the different states. The Commission recommended increasing the share of the Union’s tax revenue that is devolved to the states, thereby providing them with greater fiscal autonomy. In terms of horizontal devolution, the Commission devised a formula that took into account factors such as population, income distance, fiscal discipline, and special needs. This formula aimed to ensure that resources were distributed equitably among the states, taking into account their individual circumstances and development challenges.

In conclusion, under the leadership of Dr. Vijay Kelkar, the 13th Finance Commission made significant contributions to India’s fiscal policy framework. Its recommendations on fiscal consolidation, public spending efficiency, and tax devolution had a lasting impact on the financial relations between the Union and State Governments. The Commission’s work helped to promote fiscal stability, enhance the quality of public services, and strengthen the foundations for sustainable economic growth.