The fifth meeting of the Economic Advisory Council of the Fifteenth Finance Commission (XVFC) was held in New Delhi today. Chairman and Members of the XVFC, members of the Advisory Council and some special invitees attended the meeting.

Advisory Council Members were updated by the Commission regarding the additional terms of reference extending XVFC’s term till October’ 2020. Additional To Rs also asked the Commission to submit two reports- one, for the year 2020-21 and second report for the five year period of 2021-22 to 2025-26.

Advisory Council was informed about submission of the 2020-21 report and now the Commission is on its next task of preparing the report for 2021-26 period.

Among other things, following major issues were discussed -

• Possible macro assumptions for the Commission’s award period relating to real growth, inflation etc were discussed in detail. Issues like the structural shift in inflation, the relationship between the GDP deflator and the consumer price inflation and possible trajectories of movement in real activity were discussed.
• Tax revenues and expenditure patterns emerging both at the Union and the States level. Possible way to improve tax collection for additional resource mobilization.
• Issues related to stabilization of Goods & Services Tax (GST), relationship between GST Council and Finance Commission and GST compensation being paid to States.
• Issues related to compliance and adherence to Fiscal responsibility legislations (FRLs) enacted by respective governments. The need for bringing in fiscal  transparency was underlined in the discussions. 

The Advisory Council Members present were -Dr. M Govinda Rao, Dr. Indira Rajaraman, Dr. SudiptoMundle, Dr. Omkar Goswami, Dr. Arvind Virmani, Dr. Surjit Bhalla and Dr. Prachi Mishra.

The Special invitees to the meeting included -Dr. Ajit Mishra, IEG; Dr. Manoj Panda, IEG; Dr. Rathin Roy, NIPFP; Dr. Kavita Rao, NIPFP; Ms. Puja Mehra, Economist.

 

Fiscal Responsibility focus as commission mandate extended and tasked with reports on macro, tax, GST, and fiscal transparency. The meeting recorded extension of the Commission's mandate via additional terms of reference requiring a one year and a multi year report; discussions centered on framing macroeconomic assumptions for the award period and on Union and State revenue and expenditure patterns, with focus on tax revenue mobilization, GST stabilization and compensation, and compliance with Fiscal Responsibility Legislations to strengthen fiscal transparency.