By - Paisafatafat Blog
The coronavirus pandemic has thrown the Finance Commission into a flurry of activity bringing the Economic Advisory Council to hold a hitherto unscheduled meeting on April 23 and 24. The main agenda of several critical rounds of meetings to be held across a span of 2 days, is to consider the effects and implications of the pandemic on the growth of India’s gross domestic product and also practicable expenditure capacity on the part of public in order to augment the economy at large.
The meetings will be held via video conference and will be chaired by former top bureaucrat and Chairman of the 15th Finance Commission Mr. Nand Kishore Singh. Other members attending the same will include five members of the Council, chief economic advisor Krishnamurthy Subramanian, Sajjid Z Chinoy, Prachi Mishra, Neelkanth Mishra and Omkar Goswami on day one of the meeting. Day two of the meeting will include the rest of the members of the Council.
Discussions will also include possible assumptions of tax buoyancy and revenue for both 2020 and 2021. Official statements also mentioned the mulling over uncertainty of macro variables over time, within the agenda of the meeting.
The first report with recommendations for this financial year had been submitted in early February by the 15th Finance Commission with a final report of recommendations for the years 2021-26 awaited not earlier than October 30. However, the Covid-19 outbreak has unsettled all previous plans of the Commission, bringing them to a state of exigent reassessment.
International agencies such as World Bank and International Monetary Fund have already slashed India’s growth forecast as a direct repercussion of the Covid-19 pandemic.
The IMF has also cut projections of India’s GDP growth of 5.8 per cent to 1.9 per cent. This is in the wake of perhaps the worst economic slump since the Great Depression in early twentieth century.
World Bank too has given speculations about the Indian economy to grow only between a meagre 1.5 to 2.8 per cent this fiscal year. This is equated to the slack in growth performance realized during the 1991 liberalization.
Some other areas of concern that the Commission might be faced with are depleting revenues and its crushing effect on the shares of individual states. States are on a constant demand for increased revenues and allocations as they are faced with mounting dues.
Tax revenues too are far below the expected tax capacity of the country as per the Commission. It may however be coerced to further lower the tax estimates now.
As per the Commission, there were also glitches and pitfalls in the implementation and collection of GST. Collections did not match the original estimates, collection processes were strained, invoice and input tax mismatching as well as delay in refunds.
The current state of affairs, as a result of the Covid-19 situation may force the Commission to reevaluate its plan of action and adopt a completely different approach to accommodate the present crisis.
Image Source: INDIA TODAY