New Delhi, May 16 (IANS) The Finance Commission on Thursday said despite fluctuations, high GDP growth has continued over the medium term and direct taxes have been sound while there are some periodic ups and downs on the indirect tax front.
The Commission made these observations during its meeting with the Finance Ministry.
“The Commission observed that the GDP numbers have somewhat fluctuated within the overall global trend which suggests continued high growth trend over the medium term. The Commission also noted that the revenue projections on the Direct Taxes are healthy though on Indirect Taxes, there have been periodic fluctuations.
“On the expenditure trend, there were discussions in regard to the rationalisation of the Centrally Sponsored Schemes in sync with the new life cycle, they being co-terminus with the Finance Commissions,” the Finance Ministry said.
Detailed discussions have continued over the last few months with the Finance Ministry on the issues of the consequences of UDAY and the 7th Pay Commission, particularly in the context of the finances of the states.
It presented before the Commission some preliminary views of the government on the Commission’s Financial Terms of Reference.
The economic development in the last five years were analysed in detail with specific focus on growth, investments, industrial production, banking and payments, inflation and monetary policy, the external sector, and the medium-term outlook.
The Ministry made its projections for 2018-19 and 2019-20 to the Commission, along with its projections for the award period of the Commission (2020-21 to 2024-25).
The ministry also gave some accounts and overviews of the receipt and expenditure forecast including a fiscal overview of the 14th and the 15th Commissions, both as percentage of the GDP and of the GRR (growth rate of return).
The Finance Commission also held consultations with senior Ministry officials on the overall economic situation and key economic variables, “credible to the ongoing work of the Commission to reach an appropriate conclusion on both the vertical and the horizontal devolution”.
Apart from the Commission’s Chairman N.K. Singh and members Ajay Narayan Jha and Anoop Singh, Finance Secretary Subhash Chandra Garg, Revenue Secretary Ajay Bhushan Pandey, Expenditure Secretary Girish Chandra Murmu, Chief Economic Adviser Krishnamurthy Subramanian, Central Board of Direct Taxes Chairman P.C. Mody, Central Board of Excise and Customs Chairman P.K. Das and other senior officials of the Ministry and the Commission were present.
They also made a resource forecast which included tax projections, and a comparative picture of tax growth and buoyancy. The expenditure projections made by the Ministry included expenditure classifications and requirements, the expenditure of the Central Government during the 14th Finance Commission period and the expenditure requirements during the award period of the present Commission.
The Ministry and the Commission also had a detailed discussion on fiscal management as well as on GST issues, local body grants and population data.
The Commission is now awaiting the full Memorandum of the Central government through Finance Ministry which is expected to be delivered soon.