Current Affairs

Finance Commission constitutes Committee to Review Fiscal Consolidation Road map of the General Government

The Chairman of the Fifteenth Finance Commission has constituted a Committee to review the fiscal consolidation roadmap of the general government.

  • The Committee will be chaired by Chairman N. K. Singh.  The other members of the Committee will be A. N.  Jha and Dr. Anoop Singh, Members of 15th Finance Commission, one representative each from the Office of the Comptroller and Auditor General of India and the Controller General of Accounts, the Joint Secretary (Budget) of the Department of Economic Affairs in the Ministry of Finance.
  • Two outside experts, namely, Dr. Sajjid Z Chinoy & Dr. Prachi Mishra will also be Members of the Committee;  further, the Committee will include as Members the representatives from State Governments S. Krishnan, Additional Chief Secretary, Government of Tamil Nadu and Anirudh Tiwari, Principal Secretary, Government of Punjab.
  • Analytical and data support to the Committee will be provided by a team from the National Institute of Public Finance & Policy, New Delhi. The Economic Division of the Finance Commission Secretariat shall facilitate and support the working of the Committee.

The Terms of Reference of the Committee are –

  • The Committee shall make recommendations on the definition of deficit and debt for the Central government, overall states, the General Government and public sector enterprises by considering all explicit and measurable liabilities of the sovereign and by bringing inconsistency between the definition of debt (stock) and deficit (flow).
  • The Committee shall also lay down the principles for arriving at the debt of the general government debt and consolidated public sector with appropriate netting to avoid double-counting.
  • The Committee shall define contingent liabilities, provide quantifiable measures of such liabilities, wherever possible, and specify conditions under which “contingent” liabilities become “explicit” liabilities of the public sector.
  • Based on the above definition, the Committee shall review the current status of deficit and debt at different levels.
  • Based on the above, the Committee shall recommend a debt and fiscal consolidation roadmap for FY21-FY25 for the Central Government, overall States, and General Government and attempt building up scenarios for public sector enterprises.

The Fifteenth Finance Commission

  • The XV Finance Commission was constituted by the President of India under Article 280 of the Constitution on 27 November 2017 to make recommendations for five years from 1st April 2020 to 31 March 2025.
  • The 15th Finance Commission was constituted under the chairmanship of N.K. Singh, it includes Ajay Narayan Jha, Ashok Lahiri, Ramesh Chand, Anoop Singh, and Secretary Arvind Mehta.
  • Politicians including chief ministers and finance minister, retired civil servants; judges; and economists from South Indian states opposed the commission’s terms of reference as it used the data of the 2011 census, instead of the data of the 1971 census, as previous commissions had. Politicians from the south believed that this would dilute the share of South India in the pool of union’s tax revenue, because of its shrinking population vis-à-vis the north since 1971.

 

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