The 15th Finance Commission on Saturday, in an interim report, suggested reducing the states’ share in gross tax revenue from 42% to 41%, with the 1% going to the Union Territory of Jammu and Kashmir, Business Standard reported. It recommended that Rs 90,000 crore be set aside for local bodies. However, the panel said that state-specific grants will be discussed only in its final report.

The panel also said gross tax revenues for 2019-’20 will be Rs 22.4 lakh crore, against the 2019 budget estimate of Rs 24.6 lakh crore, a shortfall of Rs 2.2 lakh crore. A revised estimate of the revenues will be provided following Finance Minister Nirmala Sitharaman’s Budget speech.

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The government had in November last year extended the term of the 15th Finance Commission by one year, and asked it to prepare an interim report for 2020-’21, and a full report for the 2021-’22 to 2025-’26 financial years.

On Saturday, the commission said that “there is anecdotal, analytical, and other evidence to suggest” that the fiscal deficit will not meet its target of 3.3% for 2019-’20. Under the Fiscal Responsibility and Budget Management Act, 2003, the panel allowed for a slippage in the deficit of 0.5% of the Gross Domestic Product. However, it added that there should be a “clear commitment” to the original target set for 2020-’21.

Subsequently, during her Budget speech, Sitharaman set the fiscal deficit target for 2020-’21 at 3.8% of GDP. The finance minister also broadly accepted the report of the finance commission. A final report of the panel will be published later in the year.