Finance Commission Holds Consultation With Leading Economists

Finance Commission held its second consultation with the leading economists at YASHDA, Pune on 21st August 2018. A total of 16 eminent economists and domain experts including Vijay Kelkar attended the meet and enlightened the Commission with their views. Chairman N.K.Singh highlighted the changed economic scenario post abolition of Planning Commission which has altered the traditional system of resource allocation and consequently abolition of distinction between Plan and Non-Plan funds. Wide ranging discussions were held and issues which were discussed prominently are as below:

Intra state inequalities across the country need to be considered by the Commission.

Flow of funds and resources to Urban Local Bodies and PRIs need to be strengthened.

Orderly fashion of Urbanisation needs to be encouraged to facilitate balanced socio-economic development.

Fiscal consolidation roadmap needs careful consideration of the amended FRBM Act especially with reference to Debt/GDP ratio and Fiscal Deficit looking at the different conditions prevailing across the states.

Contemporary population data would be useful for the purpose of devolution.
Commission needs to balance equity with efficiency.

The taxation capacity of states and any formula on devolution needed to be formed by equity, justice and uniformity.

Centrally Sponsored Schemes need a holistic view to ensure the synergy in resource allocation to various schemes.

The Chairman summing the discussion felt that continued engagement with Domain Experts over the coming months will help commission in firming up the approach before reaching tentative conclusions both on the vertical and horizontal devolution of revenue besides an approach for local bodies and panchayats which were both realistic and would genuinely deliver the intended resources to the beneficiaries.

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