The three-month extension sought by the Thirteenth Finance Commission has worried the finance ministry as it is not sure it can afford to wait till December 2009 for the constitutional panels report.
The Commission, whose original deadline is October 31, wants it extended to December 31 as it still has to visit some states and is also waiting for the final report on the goods and services tax (GST).
But the finance ministry is of the view that this would delay the Budget making exercise.
The finance commission aw ard will be for 2010-15. If we dont have their report in place at least two to three months before the Budget exercise starts, we wont be able to finalise the Budget Estimates for 2010-11, a finance ministry official said.
North Block begins preparations for the Union Budget by December, when its starts discussions with government ministries for their requirements and allocations for the next fiscal.
So it is necessary that the finance commission sends in its report at the latest by November, as the finance ministry would need time to study its recommendations before embarking on its annual ritual.
The Finance Commission is a Constitutional body set up every five years to recommend a formula for devolution of taxes between the Centre and the states which is an essential part of the Budget activity. The panel is led by Vijay Kelkar.
This time around it has two new responsibilities it has to review the state and Centre finances and suggest measures for maintaining a stable and sustainable fiscal environment as well as evaluate the impact of the proposed GST.
The Commission wants some additional time to finalise its report as it still has to visit some states to discuss their concerns.
The visits were delayed because of the general and state elections April and May this year. Also, the uncertainty over the model and rate structure for the GST, which is yet to be agreed upon by the Empowered Committee of state finance ministers, has further caused delay to the Kelkar panel.