15th Finance Commission held a meeting with economists in Jaipur on 8th September 2019, in coordination with the Government of Rajasthan and CUTS International. Many issues pertinent to fiscal devolution and issues specific to improving the economic growth of Rajasthan have been discussed in the meeting. The major points raised by the economists during the meeting include the following.

(i) The deficit management of Governments is a matter that needs to be carefully handled with full recognition of contingent liabilities. At the same time, considering the investment requirements of the Indian economy, it is also important to ensure that future fiscal policy crowds in private investment.

(ii) Corrections attempted in the power distribution sector in terms of UDAY scheme affected the deficit position of the Government of Rajasthan considerably. Going forward, the assessment of the expenditure and revenue deficit of the State should take this into account.

(iii) Water availability and distribution is one of the most important concerns for the State of Rajasthan. In Rajasthan, water supply at the village level is extremely expensive. This gives rise to concerns about sustainability of water supply programmes.

(iv) Considering the above special issues concerning Rajasthan, future fiscal allocations may give special consideration to the difficulties in managing the cost of implementing programmes in deserts. Finance Commission may also think of making allocations that incentivise water use efficiency.

(v) It is important to stay on course of the debt consolidation roadmap mandated by the States’ own Fiscal Responsibility legislations.

(vi) It is important that the grants from the Union Government including through the window of Finance Commission may give enough scope for project level innovations at the State level and at the level of implementation agencies.

(vii) At the macro level, the local government expenditure as percentage of total expenditure of the consolidated public sector is very low in India. This needs to be corrected. As responsible and accountable governments, it is important that local self-governments raise resources on their own and maintain their accounts properly.

(viii) It is also important to create mechanisms to assess the impact of schemes implemented by governments at different levels.

A number of other issues relating to the Terms of Reference of the 15th Finance Commission were also discussed.

The economists who were present at the interaction with Chairman Shri N. K. Singh and members of the Finance Commission include:-

Shri Ambuj Kishore, Dr. Arvind Mayaram, IAS, (Retd), Mr. Atul Sharma, Mr. Basantt Khaitan, Prof. C.S. Barla, Ms. Divya Maderna, Mr. Edward Dickinson, Dr. Govind Sharma, IAS (Retd)., Mr. Gyan Prakash,  Dr. Jyoti Kiran,  Prof. Kanta Ahuja,  Smt. Krishna Bhatnagar, IAS (Retd), Dr. Manjit Singh, IAS (Retd), Mr. Mukesh Gupta, Dr. M.S. Rathore,  Prof. N.D. Mathur, Prof. Ramesh Kumar Arora, Prof. Rajesh Kothari, Dr. Rashmi Dickinson, Shri Rajendra Bhanawat IAS (Retd), Shri Rakesh Verma IAS (Retd), Shri Rao Rajendra Singh,  Amb. Satish C. Mehta, IFS (Retd), Prof. S. S. Somra,  Amb. Savitri Kunadi (Retd). Mr. S. S. Bhandari. Dr. Vinayak Pandey.

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MC

(Release ID: 1584470) Visitor Counter : 162

Fiscal devolution: recommendations to account for contingent liabilities, incentivise water efficiency and strengthen local government finances. Fiscal devolution and state fiscal management were addressed with emphasis on prudent deficit management that recognises contingent liabilities and preserves space for private investment. The meeting recommended that assessments incorporate the fiscal impact of power-sector corrections like UDAY, account for high costs of village-level water supply in deserts, and incentivise water use efficiency. It urged adherence to debt consolidation roadmaps, design of grants to permit project-level innovation, strengthening of local government resource mobilisation and accounting, and establishment of mechanisms to assess the impact of government schemes.