The Cabinet on Wednesday approved an extension of the term and coverage of the 15th Finance Commission by almost a year. The Union Cabinet meeting chaired by Prime Minister Narendra Modi also approved the 15th Finance Commission to submit its first report for the financial year 2020-21.

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"The Union Cabinet chaired by Prime Minister Shri Narendra Modi today approved the Fifteenth Finance Commission to submit first report for the first fiscal year viz. 2020-21 and to extend the tenure of XV-FC to provide for the presentation of the final report covering FYs 2021-22 to 2025-26 by 30th October, 2020. The extension of the term will enable the Commission to examine various comparable estimates for financial projections in view of reforms and the new realities to finalise its recommendations for the period 2020-2026," the government said in a statement.

The extension of the Finance Commission seems to have been necessitated by the bifurcation of Jammu and Kashmir into two Union territories although the press release hasn't specifically referred to it.

"The Commission, on account of the restrictions imposed by the Model Code of Conduct, completed its visit to States only recently, which had a bearing on the detailed assessments of States requirements. The Terms of Reference for the commission are wide-ranging in nature. Comprehensively examining their implications and aligning them to the requirements of the States and the Central Government will require additional time. The proposed increase in coverage of the period for which the Commission's recommendations are applicable, will help medium-term resource planning for the State Governments and the Central Government," it added.