15th Finance Commission chairman N K Singh rues lack of fiscal institutions

Says states don't have fiscal flexibility for exigencies as Centre has

N K Singh, chairman of the 15th Finance Commission, on Monday flagged the absence of independent fiscal institutions and lack of flexibility for states to deviate from the fiscal consolidation roadmap in times of emergency.

 

“There is a lack of fiscal institutions in India, it be by your fiscal Council, or by any other institution. While the country has some kind of a fiscal architecture, it does not have independent fiscal institutions,” said Singh during a webinar on India’s Overall Fiscal Architecture, organised by the Centre for Social & Economic Progress.

 

Then, there is this asymmetry of power between the Centre and the states over fiscal flexibility.

 

“As far as the central government is concerned, it often accounts for very good reasons for exigencies of circumstances, ever take recourse to escape clauses and trigger escape clauses... No such similar arrangement, or device is available to the states,” Singh added.

 

He said the 15th Finance Commission tried to mitigate this lacunae by giving a fiscal range, instead of a fixed fiscal point. He once again raised the issue of revisiting the seventh schedule of the Constitution, which divides powers between the Union and states.

 

“In the light of the fact that the government has become increasingly presidential and less Westminster model... This is so in the Centre and the states... I therefore believe we need to go back to the drawing board and look at what is a kind of a seventh schedule, which will be relevant.”