The Cabinet also cleared the setting up of the 15th Finance Commission to decentralise the tax revenue between the central government, state governments and local bodies.
The Cabinet Committee on Economic Affairs on Wednesday approved wage revision for central public sector enterprises (CPSEs). Finance Minister Arun Jaitley said that every CPSE has flexibility for negotiating wage revision. The Cabinet said that CPSEs will have to ensure negotiated scales of pay don’t exceed existing scales.
The Cabinet also cleared the setting up of the 15th Finance Commission to decentralise the tax revenue between the central government, state governments and local bodies. The 15th Finance Commission will recommend the sharing of resources between the Centre and the states as well as among states from the divisible pool for the five years from April 2020 to March 2025. Arun Jaitley said that the Cabinet has cleared setting up of the 15th Finance Commission, the terms of reference will be notified in due course.
The Finance Commission is set up two years before the end of previous five years period, which is March 2020, the process has been reportedly advanced to change the fiscal cycle from January to December. The Narendra Modi government had allocated Rs 10 crore in the budget for the constitution of the commission.
Former revenue secretary NK Singh is likely to head the first Finance Commission in the post-Planning Commission era and under the new indirect tax regime – goods and services tax (GST). Former Reserve Bank Governor YV Reddy headed the 14th Finance Commission constituted during the previous UPA regime. It had submitted its recommendations to the President after the NDA government came to power in 2014.
The government also said that it will come out with an ordinance to make certain amendments to the Insolvency and Bankruptcy Code. The Code, which became operational in December last year, provides for a market-determined and time-bound insolvency resolution process. It is implemented by the corporate affairs ministry.