FC constitute a panel
The Fifteenth Finance Commission (FC) has constituted a panel to examine whether a separate mechanism be set up for the funding of defence and internal security. The five-member group, to be headed by Finance Commission Chairman N K Singh, comprise secretaries from the ministries of defence, home affairs and finance, besides a member of Commission. The mandate of the Group on Defence and Internal Security will be to examine whether a separate mechanism for funding of defence and internal security ought to be set up, and if so, how such a mechanism could be operationalised, the Commission said.
- The Commission has already submitted its interim report to the President regarding devolution of tax receipts between the Centre and states/Union Territories. The final report is expected later in the year.
- Meanwhile, the sixth meeting of the Advisory Council to the Commission was held to seek the views of the participants on the report of the XV-FC for 2020-21, the formula for horizontal devolution of central taxes and other recommendations contained in the report.
- Views on the outlook for nominal GDP growth for the period 2021-22 to 2025-26, tax buoyancy and other macro-economic parameters too was discussed.
- While discussing about the framework for vertical and horizontal devolution of taxes, the methodological innovations made in the Report were favourably commented upon, the Commission said.
- The options for nominal GDP growth and resource mobilisation, as well as, the downsides and upsides to different possibilities therein were discussed in detail, particularly in the light of emerging global trends and patterns discernible in high-frequency, domestic indicators.
- The centrality of strengthening the administration and technology platform of GST in ensuring fiscal balance of the Centre and the states was also emphasised.
Another Panel For Fiscal Framework
- The Finance Commission has also decided to form a panel to address issues of debt and fiscal deficit of states and centre.
- The panel will help in designing a legal framework for a fiscal architecture for the states and centre. There is need for a fiscal roadmap for states and centre debt, and also their contingent liabilities and off-budget borrowings.
- The 15th Finance Commission, in its report for 2020-21, had also pointed out that outstanding extra-budgetary liabilities of the state and central governments need to be clearly identified, and eliminated in a time-bound manner.
- This needs to be done in a transparent way of reporting deficit and debt as provided in the amended FRBM Act of 2018, according to the report.