The 15th Finance Commission chairman NK Singh on Friday known as for a revisiting of the Seventh Schedule of the Constitution that divides the legislative powers in between the Centre and states, in an apparent disapproval of a perceived tendency of the Centre to expand the Concurrent List, at the price of states’ exclusive, genuine powers. The division of functions enshrined beneath Seventh Schedule of Constitution got increasingly eroded more than a period of time, starting with the constitution of the Planning Commission in 1951 and later, the shifting of the subjects like forest and education from the state to the Concurrent List by the 42nd Amendment of the Constitution, he noted. “Some examples in today’s context are the Mahatma Gandhi National Rural Employment Guarantee Act of 2005 and the National Food Security Act 2013. Thus, we need to revisit the VII Schedule of the Constitution in a more fundamental way,” Singh stated, at a Ficci forum. He also stressed the have to have for rationalisation of the centrally sponsored schemes (CSS) with higher flexibility to every state.
The commission on Centre-State Relations, headed by Justice M M Punchhi, in 2010 advised that the Union really should only transfer these subjects into the Concurrent List, which are central to reaching demonstrable national interest.Singh, who lately submitted the commission’s report to the President of India for the award period FY22-FY26, also pitched for continuity on aligning the fiscal consolidation road map of the Centre and the states and stated a fiscal deficit variety rather than a single point as target, may well be in order.
“We need to give serious consideration for a consultative forum for credible policy dialogue between the Centre and the states. The Niti Aayog has emerged as a credible think-tank and their work in the sphere of Centre-state relations needs to be recognised. However, the states are keen to have a different kind of a policy-based consultative forum. This is an area which deserves serious consideration of policy makers.
“There is a need for continuity on aligning the fiscal consolidation road map of the Centre and the states in a more harmonious symmetry. A differentiated debt path of states which recognises the present constraints and issues of legacy debt must be handled with sagacity and sensitivity. This is more required in times of adversities like the world is facing now due to the pandemic,” Singh stated.
The Centre lately permitted added borrowing space of 2% of GDP for states this year (more than and above 3% mandated beneath FRBM) primarily based on reforms in 4 places — universalisation of a single nation-a single ration card, ease of performing company, energy distribution and urban neighborhood body revenues.
“A fiscal range than a fiscal point based on expenditure outcomes may be the need of the hour,” Singh stated, adding, that these problems had been sought to be addressed in the commission’s recommendation for award period for FY22-FY26.
On CSS, he stated the government wants to constitute an empowered group of domain authorities to submit to the finance minister and Prime Minister on modalities of additional and deeper rationalisation of these schemes. Based on the internal physical exercise of the 15th Finance Commission, there are around 211 schemes/sub-schemes beneath the 29-umbrella core and core of the core schemes.
“The Centrally sponsored schemes should be flexible enough to allow states to adapt and innovate. We also need a far more credible policy for rationalisation of Centrally Sponsored Schemes and Central outlays than have been possible so far.” The total public outlays on the CSS are close to Rs 6-7 lakh crore per annum with the Centre’s share more than Rs 3.5 lakh crore or 1.2% of present GDP, he stated.
He also stated the symmetry in the working of the GST Council and the Finance Commission deserves really serious considerations. The Finance commissions advise distribution of revenues in between Union and the states and thereafter, amongst the states additional to the third tier. They appear at projections of the expenditure and income, but problems of GST prices exemptions, adjustments, and implementation of the indirect taxes are completely inside the domain of the GST Council.