Finance Commission meets its Advisory Council: Key Highlights
This is the third set of meetings of the finance commission with its advisory council after the submission of the Report of the 15th Finance Commission for the year 2020-21.
The 15th Finance Commission held virtual meetings with its Advisory Council on June 25-26, 2020 and discussed various issues confronting the Commission. The meeting was chaired by N K Singh and was attended by all the members and senior officials of the Commission.
This is the third set of meetings of the finance commission with its advisory council after the submission of the Report of the 15th Finance Commission for the year 2020-21 and second such meeting after the onset of national lockdown due to COVID-19 pandemic.
Dr. Krishnamurthy Subramanian, Dr. Prachi Mishra, Dr. Sajjid Z Chinoy, Dr. Omkar Goswami, Neelkanth Mishra and special invitee Dr. Rathin Roy attended the meeting on June 25. While, Dr. Arvind Virmani, Dr. M Govinda Rao, Dr. D K Srivastava and Dr. Sudipto Mundle from the Advisory Council attended the meeting on June 26, 2020 along with Dr. Shankar Acharya and Dr. Pronab Sen.
• The Advisory Council members felt that since they had met the Commission in April, the national lockdown was further extended till May end and now restrictions are being lifted in a phased manner resulting in the gradual resumption of economic activities.
• The council feels that the impact of the pandemic on the economy and on the fiscal positions of the Union and State Governments is still highly uncertain.
• Several analysts and think-tanks have reduced their GDP growth projections for 2020-21. Supply chains are still to recover due to ongoing social distancing measures in place and local level restrictions in many places, which in turn affects the recovery process.
• The Advisory Council also discussed the adverse implications of the economic constraints on tax revenue collections of the Union and State Governments.
• The council members while noting that tax collections can be considerably affected by the pandemic indicated that the impact of the pandemic on tax collections may also be asymmetric.
• Besides this, the implications on the deficits and debt of the general government were discussed along with possibilities for establishing a path for consolidation of public debt, post the pandemic.
• The council noted that the Governments will have substantial expenditure burden on account of health, support to poor and other economic agents.
• The Members of the Advisory Council also expressed that there is massive uncertainty going forward and appreciated the tall challenges for the Commission in designing fiscal transfers for the five-year period.
The 15th Finance Commission along with the Advisory Council will be closely monitoring emerging indications on the economic and fiscal front as they become available, in order to make the best possible assessment.
The 15th Finance Commission had submitted its report for the financial year 2020-21 to President Ram Nath Kovind in December 2019 for further necessary action. The commission was constituted by the President on November 27, 2017 under Article 280 of the Constitution to make recommendations for a five year period starting from April 1, 2020 to March 31, 2025.