17.12         ndian     onom
                                                                      XII of the Constitution and the
        collecTion raTe                                               allocation between the states of the
     Collection rate is the ratio of total customs                    respective shares of such proceeds;
     revenue and the total value of imports for a                 (b) the principles which should govern
     year. This is an indicator of overall incidence of               the grants-in-aid of the revenues of
     customs including countervailing duties (CVD)                    the states out of the Consolidated
     and special additional duties (SAD) on imports.                  Fund of India and the sums to be
     Several exemptions are offered by the GoI in                     paid to the states which are in need
     customs duty on a variety of imports. This is the
                                                                      of assistance by way of grants-in-aid
     reason why India’s customs collection does not
                                                                      of their revenues under Article 275
     increase as much as much its imports increase.
                                                                      of the Constitution for the purposes
              India’s collection rates have been lower
                                                                      other than those specified in the
     between 2009–2013 due to various exemptions
                                                                      provisos to Clause (1) of that article;
     announced by the GoI on the imports of
     petroleum, oil and lubricants (POL) and other                    and
     commodities. These exemptions in the base                    (c) measures needed to augment the
     custom duties were announced to check the rising                 Consolidated Fund of a state to
     commodities prices in the world market together                  supplement the resources of the
     with a general inflationary trend seen in India due              panchayats        and     municipalities
     to food inflation. At present the collection rate for            in the state on the basis of the
     India stands at 6.1 per cent23.                                  recommendations made by the
                                                                      finance commission of the state.
        14Th finance coMMission                              (ii) To review the state of finances, deficit,
     The 14th Finance Commission (FFC) was                        and debt levels of the union and states,
     constituted on 2 January, 2013 under the                     and suggest measures for maintaining a
     Chairmanship of Dr. Y. V. Reddy, former                      stable and sustainable fiscal environment
     RBI Governor with Prof. Abhijit Sen, Ms.                     consistent with equitable growth including
     Sushma Nath, Dr. M. Govinda Rao and Dr.                      suggestions to amend the FRBMAs
     Sudipto Mundle as the other four members. The                currently in force. The commission has
     recommendations of the commission will apply                 been asked to consider and recommend
     on the period 2015–20 and its report has to be               incentives and disincentives for states for
     submitted by 31 October, 2014.                               observing the obligations laid down in
          The broad Terms of Reference and the matters            the FRBMAs.
     to be taken into consideration by the commission       (iii) In commission is required to consider—
     are:                                                         (a) the resources of the Central government
           (i) Tax Devolution & Grant related references              and the demands on the resources of
                (a) the distribution between the union                the central government;
                    and states of the net proceeds of taxes       (b) the resources of the state governments
                    which are to be, or may be, divided               and demands on such resources under
                    between them under Chapter I, Part                different heads, including the impact
       23.    Department of Revenue Ministry of Finance,              of debt levels on resource availability
              Government of India, New Delhi, March 2017.             in debt-stressed states;