Finance Commission to 'reconcile data', come up with own conclusion

The 15th Finance Commission would reconcile data from various public sources to come up with its own conclusion of a reliable economic data, the commission's chairman N K Singh told reporters at the Reserve Bank of India (RBI) headquarters on Thursday.

The commission members were in Mumbai to meet the RBI governor and senior officials, as well as economists and bankers.

“In the next two days, some of us are staying back for data reconciliation, between the CAG (comptroller and auditor general), the RBI and the data which we got from finance ministry sources. So as far as we are concerned, we will try to come to a conclusion about what we would consider a reliable data in public domain,” said Singh. However, he hastened to clarify that such reconciliation has no relations whatsoever about the methodology or computation of that.

As far as what would be the nature of the reconciliation, Singh said it would be “within the bounds of acceptable and appropriate prudence to be able to do so”.

Various sources of data would be used for comparison, for states in particular, the finance commission officials said. Singh was replying to a question about the veracity of economic data being put out by the government, and being questioned by economists.

The commission expressed its concerns on shrinking household savings, as that would eventually crowd out private sector investment.

The commission was happy with the buoyancy of direct taxes, but “projections of indirect tax collections, especially with regard to the goods and services tax (GST), have not been as healthy”, Singh said.

“We are going to have another round of discussions with the Department of Revenue based on the latest figures of the improvements in GST behaviour and what changes can be made to make it more buoyant, stable and predictable,” he said.

Although the states have their own fiscal deficit target, the glide path is not being adhered to and the commission was worried about that.

“We would like to capture the debt figures, the public sector borrowing requirements and contingent liabilities so that we get a true and holistic picture of the debt scenario. We have had discussions with the RBI regarding this, and this is one area into which the commission will be giving some attention,” said Singh.

“We are closely looking at what kind of disaggregated growth, debt and fiscal deficit trajectory would be practical to attain the overall objective of the general government's debt and fiscal deficit being consistent with the FRBM targets and yet within the bounds of practicality.”

The finance commission did not much discuss the Bimal Jalan committee with the RBI as it was the central bank's internal affair. However, the Jalan committee “is in a fairly advanced stage of its deliberations”, and should be presented before the Budget in July, Singh said.

The commission has visited 20 states and union territories but is currently stuck because of the model code of conduct, which kicked in after the election dates were announced.

“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 finance commission chairman said.