The 15th FC (Finance Commission) is a government body, which is behind the conduct of fiscal policies of the Union and State Government. According to the reports recently, The Economic Advisory Council of the 15th FC is going to meet via video conference on April 23-24 to discuss COVID-19’s impact over India’s GDP and the possible public expenditure to gear up India’s economy. The chief economic advisor Krishnamurthy Subramanian and other four members of the council will attend the meeting.
As we all are aware by now, the coronavirus outbreak has literally shaken the world’s economy leading to panic amongst all the global leaders. The economy of India is facing an unprecedented collapse over the last few weeks.
Hence, The Advisory Council decided to keep the agenda of discussion as, the GDP growth in the next two years and the uncertainty of macro variables with time. The other possible agendas being how to control the decreasing revenues of the states and the changes in the government’s Tax revenue growth.
What is the Commission up to?
The country’s Fiscal policy plans are being disrupted due to this pandemic. In order to maintain social distancing, the government has banned the sales of liquor. Fuel sales are also dropping which is affecting the revenue of all the states in India.
Tax collection through GST is getting delayed due to the lockdown. Some firms announced that they might look for the reduction of manpower in their companies which means our jobs are also at risk.
It is visible that the States are suffering. The commission hence recommended state and central governments for full-disclosure of additional borrowings because states were urging for more grants. In addition, it recommends rationalizing and widening of the taxes.
With respect to the previous Commission reports, The Prime Minister’s EAC said that the tax collections through GST are less than what is expected and the collection is inconsistent. Consequently, now the Plan-of-Action involving GST Stabilization and Tax collection needs to be altered due to the COVID-19 crisis.