NEW DELHI: The 15th Finance Commission is likely to consider 7%-plus growth during the five-year period beginning 1 April 2020, when it announces its recommendations for the period, despite concerns over goods and services tax (GST) collections.
The commission, headed by chairman N.K. Singh, held a two-day meeting that ended on Thursday with finance ministry officials and members of its advisory panel, and is likely to submit its final recommendations to the new government by December.
“The commission observed that the gross domestic product (GDP) numbers have somewhat fluctuated within the overall global trend, which suggests a continued high growth trend over the medium-term. The commission also noted that the revenue projections on direct taxes are healthy, though on indirect taxes, there have been periodic fluctuations," the finance commission said.
“The discussions were mostly wide ranging and advisory in nature. The finance commission heard all the experts present and will take a final view on various issues, including matters related to gross state domestic product through internal discussions," an official of the panel, who was present at the meeting, said seeking anonymity.
Discussions were also held on government expenditure, especially with regard to the rationalisation of the centrally-sponsored schemes, in sync with the life cycle of the finance commission. The finance ministry presented some preliminary views of the government on the Financial Terms of Reference of the Commission. “The ministry made its projections for 2018-19 and 2019-20 to the commission, along with its projections for the award period of the 15th FC, which is 2020-21 to 2024-25. They also made a resource forecast, which included tax projections; and a comparative picture of tax growth and buoyancy," the panel said.
The finance ministry and the panel had detailed discussions on fiscal management, wherein the ministry suggested a number of steps for consideration of the commission. Discussions were also held on GST issues, local body grants and population data, the panel said.
It will now wait for the written memorandum of the centre through the finance ministry, which is expected to be delivered after the new government takes charge.
In its meeting with the advisory council on Thursday, the finance commission discussed issues of public sector borrowing requirement, GST and its implementation, transparency in publishing accounting data related to debt and deficit, and possible trajectories of debt consolidation of the government.
The impact of the UDAY scheme on state liability, dynamic interaction between fiscal deficit, inflation, interest rates, and private investments were also discussed.