The Fifteenth Finance Commission (15th FC) will monitor the situation in India in the wake of coronavirus pandemic and also the country’s response to it, as part of its deliberations ahead of the recommendations for 2020-21 (FY21) to 2025-26 (FY26).
The Commission’s Chairman N K Singh said on Thursday that some aspects that will need to be examined include health-sector specific needs, the larger impact on the economy of the Centre and states, and disaster relief funds.
Also on Thursday, the 15th FC announced it was setting up a committee to review the fiscal consolidation road map of the government. “We will need to watch and monitor the situation. The report for FY21 has been submitted. Going forward for subsequent years, some things need to be examined,” said Singh, adding, “Sector-specific needs while dealing with the health sector will need to be looked at. The larger consequences of the impact on the economy and states will need separate considerations.”
Singh also said that as the situation evolves, the issue of disaster management can be reviewed — both in state specific and national context.
In its report for FY21, the 15th FC has recommended grants for the health sector and underlined the initiatives that need to be taken.
The Commission has recommended setting up a National Disaster Risk Management Fund and State Disaster Risk Management Fund, replacing the existing national and state disaster relief funds. According to the recommendations, the new funds will be aimed at disaster mitigation, management, response, and relief.
As Singh had said earlier, the panel to review fiscal consolidation of the Centre and states will be headed by him. The other members of the panel will be 15th FC members Ajay Narayan Jha and Anoop Singh, one representative each from the Comptroller and Auditor General of India and the Controller General of Accounts, and the joint secretary of the finance ministry’s Budget division. Two economists — Sajjid Z Chinoy and Prachi Mishra — will also be members of the panel, which will include two representatives from state governments.
“The committee shall make recommendations on the definition of deficit and debt for the Centre, sates and the general government and public sector enterprises by considering all explicit and measurable liabilities of the sovereign and by bringing in consistency between the definition of debt and deficit,” said an official statement.
The panel will also lay down the principles for arriving at the debt of the general government and consolidated public sector with appropriate netting to avoid double-counting and will review the current status of deficit and debt at different levels. It will recommend a debt and fiscal consolidation road map for FY21-FY26 for the central government, overall states and general government and attempt building up scenarios for public sector enterprises.