Paul Smoke Revised: May 2011 Review of Government of India Report of the Thirteenth Finance Commission: 2010-2015 Intergovernmental, State and Local Finances Introduction The purpose of this note is to comment on the 13 th Finance Commission’s report with a particular focus on subnational finances. It is divided into three parts. The first part comments on the general approach of the Commission. The second part responds to specific questions raised in the Terms of Reference (ToR) for this note. The third part covers a few additional noteworthy issues that merit special comment. I. General Approach of the Finance Commission The 13 th Finance Commission has carefully followed the requirements outlined in their ToR (Chapter 2), both the broad mandate regarding the determination of an appropriate vertical and horizontal fiscal balance in the intergovernmental system and a range of related matters affecting the more effective use of public resources for inclusive and sustainable development in India. The process they followed in collecting information, conducting their analyses, developing their recommendations, and preparing their report was extensive, well considered, and well documented. As summarized in Chapter 2 and documented in its annex, the Commission held numerous and extensive consultations with and secured inputs from a broad based set of government representatives at all levels as well as a range of nongovernmental actors and experts, and they organized (often with other partners) a large number of workshops and seminars on specific priority topics. The Commission organized a number of working groups and task forces that included both Commission members and other experts relevant to specific priority issues. The Commission also reviewed a variety of research efforts (on India and beyond) independently conducted by other parties, conducted some of its own research, and commissioned a wide-ranging set of studies to inform their work. In communicating their findings, the Commission made regular reference to the specific requirements outlined in their ToR and explained how they approached these requirements. In a number of areas they went beyond the ToR to comment on issues that they felt were of importance to their overall subject matter. The Commission also tried to Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized 70346