By - Paisafatafat Blog
After the two-day emergency meet of the economic advisory council of the Fifteenth Finance Commission a few days back, its chairman NK Singh expressed his disfavor towards the RBI lending money to the Central government, despite the FRBM Act allowing it.
States too have been demanding a raise of their fiscal deficit figures to 5% of state GDP. To this the chairman advised they can avail as much as 0.5% only as per the FRBM laws and further than that would require major amendments in the Act.
The meeting attended by nine other council members, deliberated on the fiscal response to the extant crisis and were of the opinion that it should be more refined. They mentioned that one should also look at the economic activity that has led to the fiscal response and not just the mere size of it.
About expected growth rates, the commission agreed to wait till they have complete data from the fourth quarter of 2020 and the first quarter of 2021. As to the kind of recovery expected in the coming days, the members differed in their views with some members predicting a V-shaped graph while others looking at an ‘U’ or an ’L’ - shaped one.
The commission, which had last met in February this year and submitted its initial report, was only scheduled to meet again in October to present their reports for the years 2021-26. However, the current exigency has brought them together again in an emergency round of video conferencing to mull over the state of affairs. They also stated that they will come up with more alterations in the coming days over recommendations on health sector in view of the coronavirus pandemic.
Members are of the collected opinion that the real GDP growth that has been made before March has to be scrutinized again and emended. They also suggested financial help to NBFCs and small scale enterprises.