New Delhi: At a time when the Centre is facing difficulties to disburse GST compensation to states on the low revenue collection, the Economic Advisory Council of the 15th Finance Commission has advised the latter to treat the financial year 2020-21 and 2021-22 differently in comparison to the next four years.
The commission is to give recommendations for devolution of taxes and other fiscal matters over the next five years starting April 1, 2020.
An official statement said that during an online meeting of the advisory council with the commission, the council was of the view that the Finance Commission is faced with an “unprecedented situation of uncertainties”.
The council suggested that the 15th Finance Commission under the chairmanship of N. K. Singh will have to take a nuanced approach towards tax devolution to the states, other transfers, financing of expenditures in the midst of revenue strains including through borrowings and the path of fiscal consolidation.
“The Members of the Council also felt that the Commission will have to think unconventionally, especially in treating the five years at hand from 2021-22 to 2025-26. They advised that the base year 2020-21 and the first year of 2021-22 may need to be viewed differently from the remaining four years when the revenue situation is likely to improve gradually,” it said.
The meeting, chaired by N. K.Singh, was attended by all members of the Finance Commission and senior officials of the commission. From the Economic Advisory Council and the special invitees Arvind Virmani, Indira Rajaraman, D. K.Srivastava, M. Govinda Rao, Sudipto Mundle among others gave their views.
