– globalbihari bureau
New Delhi: The Advisory Council members of the 15th Finance Commission on Friday referred to the “massive uncertainty going forward”, and appreciated that they had “tall challenges” in designing fiscal transfers for the five-year period.
During the two-day virtual meetings that concluded on Friday, the Advisory Council discussed the adverse implications of constraints in the economy on tax revenue collections of the Union and State Governments. While noting that tax collections can be considerably affected by the pandemic, some members of the Council indicated the impact of the pandemic on tax collections may also be asymmetric.Implications on the deficits and debt of the general government was also discussed, along with constraints and possibilities for establishing a path for consolidation of public debt, post the pandemic. On the expenditure side, the members noted that Governments will have substantial expenditure burden on account of health, support to poor and other economic agents.
These were the third set of meetings with the Advisory Council, after the submission of the Report of the XVFC for the year 2020-21 and second such meeting since the onset of national lockdown due to Covid-19 pandemic. The members felt that since they had met the Commission in April, national lockdown was further extended till end of May. Now that restrictions were being lifted in phased manner resulting in gradual resumption of economic activities, the impact of the pandemic on the economy and on the fiscal positions of the Union and State Governments was still highly uncertain. They took into consideration viewpoints of many analysts and think-tanks, who had reduced their GDP growth projections for 2020-21. Moreover, due to ongoing social distancing measures in place and local level restrictions in many places, supply chains too were not yet fully restored, which affected recovery process.
It was decided during the meeting that the 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 meeting, chaired by N. K. Singh, Chairman XVFC ,was attended by all members and senior officials of the Commission. From the Advisory Council, Dr. Krishnamurthy Subramanian, Dr. Sajjid Z Chinoy, Dr. Prachi Mishra, Neelkanth Mishra and Dr. Omkar Goswami and special invitee Dr. Rathin Roy attended the meeting on Thursday. Dr. Arvind Virmani, Dr. D K Srivastava, Dr. M Govinda Rao and Dr. Sudipto Mundle from the Advisory Council, along with Dr. Shankar Acharya and Dr. Pronab Sen, attended the meeting on Friday.