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Centre approves 16th Finance Commission’s terms of reference, extends PMGKAY to 2028

The union cabinet led by Prime Minister Narendra Modi, which met on Tuesday night, has approved the terms of reference for the 16th Finance Commission, though the government is yet to choose the commission’s members, information and broadcasting minister Anurag Thakur said on Wednesday.

The cabinet also extended the tenure of the Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY) for another five years from 1 January 2024 and allocated another 11,80,000 crore to the scheme, which provides free rations to the poor, Thakur added.

The PMGKAY scheme, launched during the pandemic to support people amid lockdowns, has been vital for the poor, the minister said. “Over 80 crore people have benefited from the PMGKAY scheme, which has now been extended for another five years,” he said.

Under PMGKAY, Antyodaya Anna Yojana households, which constitute the poorest of the poor, are entitled to 35 kg of foodgrains per family per month, while priority households get five kg per person per month. 

At present, up to 75% of the rural population and 50% of the urban population are in AAY households and priority households.

Meanwhile, the 16th Finance Commission will submit its report by October 2025, Thakur said. “These recommendations will be valid for five years, from 1 April 2026 to 31 March 2031,” he added.

The terms of reference of the 16th Finance Commission are crucial for the sharing of tax revenue between the union government and states, as well as among states, and thus for overall income redistribution. 

The commission will also make recommendations for tax devolution and reforms, efficiency in tax administration and expenditure reforms. For states, tax devolution is a significant funding source for initiatives in the development, welfare and priority sectors. Currently, states get 14 instalments from the union government during a fiscal year, comprising 41% of the taxes it collects. The share of net proceeds recommended for devolution to states has increased from 29.5% during the 11th Finance Commission to 42% in the 14th Finance Commission.

The government also approved a scheme to provide drones to 15,000 women’s self-help groups, which will rent them to to farmers. The union government, through its nodal agencies, will provide 80% of the cost of the drones and accessories, and train women pilots and co-pilots apart from providing them with a monthly stipend. Mandatory five-day drone-pilot training and additional 10-day training for nutrient and pesticide application will be provided to selected members of the self-help groups. The estimated capital outlay for the scheme is 1,261 crore over the next four years.

“This scheme is a part of PM Modi’s ‘lakhpati didi’ initiative. About 10 crore women are part of self help groups,” Thakur said. “Drones will improve the efficiency of spraying fertilisers and pesticides,” he added.

On Tuesday night the union cabinet also approved the Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan (PM-JANMAN) scheme to focus on 11 critical interventions through various ministries to help members of tribal communities. As many as 75 such communities in 18 states and the Union Territory of Andaman and Nicobar Islands have been categorised as particularly vulnerable tribal groups (PVTGs). 

The government aims to provide various kinds of assistance to PVTGs spread across social, economic and education sectors. For instance, the Ministry of Ayush’s wellness centres and facilities will be extended to PVTG habitations through mobile medical units.

Similarly, the Ministry of Skill Development and Entrepreneurship will facilitate skill and vocational training in PVTG habitations while setting up multi-purpose centres and hostels for these communities. The scheme will have a total outlay of 24,104 crore, of which the union government will contribute 15,336 crore and the states 8,768 crore.

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Updated: 29 Nov 2023, 03:37 PM IST

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