Speed Post News Network
Patna : Chairman, 15th Finance Commission (FC), N K Singh, on May 9, 2019, described commission’s meeting with RBI, banks and eminent economists during its two-day visit to Mumbai on May 8 & 9, 2019, as very productive, and said that the meetings had sharpened its understanding on some of the key things that need to be kept in mind for continued macroeconomic stability.
A careful examination was made into the issues of debt, particularly as stated in the RBI’s Annual Report on State Debt Figures, Singh said. The overall debt picture of the states and the way they have complied with the ingredients of the Macroeconomic Management Bill is being looked into closely. This is an area we have had very useful discussion, he said. The 15th Finance Commission addressed the media in Mumbai
” Some states are financially well-managed, others financially poorly managed. What are the mechanisms by which the market makes its voice felt in terms of the cost of borrowing and differentiate between better-governed states and not-so-well-governed states, especially given that states are increasingly resorting to market borrowings? This was explored through possible mechanisms such as encouraging credit ratings by states. While doing this, we also explored, particularly in light of the FRBM Report, as to what mechanisms can be further strengthened so as to enable the Central Government to conform to the targets it has laid for itself. The last five years has witnessed a Government which was quite committed to adhering to the fiscal deficit targets,” the Chairman said.
“We also looked at more specific granular problems such as reconciliation of data, improving quality of statistics and data, and reliability and uniformity of data for enforcing greater fiscal discipline. Some very interesting ideas have come up, which we would deliberate upon,” Singh said.
As regards the future of Centrally Sponsored Schemes (CSSs), Singh said the Central Government spends Rs 3.5 lakh crore per annum on these schemes. Past attempts at rationalising these schemes have met with modest success. Earlier, the lifecycle of CSSs was coterminous with that of the Five Year Plans; they were hence subject to the mid-term appraisal of the Plan. Now, since there are no Five Year Plans, and hence no mid-term appraisal, the Central Government decided that it will now make the lifecycle of all CSSs coterminous with that of every Finance Commission. This year is the last year of the existing CSSs, before which they will move to the new cycle which will kick in as a result of our recommendations, he said.
From the viewpoint of the Central Government and others, this is an excellent opportunity for rationalisation and simplification of CSSs, Skingh said. This is one area which is being deliberated upon. The Finance Commission receives 30 Memorandums, one from the Central Government and 29 from each of the 29 states/UTs. We are awaiting the Memorandum of the Central Government, which we hope to receive soon, after which we will see what can be the appropriate vertical distribution of revenues between the Centre and the states, the Chairman said. The Commission has already visited 20 out of the 29 states. Visits to the remaining states will commence after the Model Code of Conduct period is over, he added
.