The advisory council of the 15th Finance Commission, during its virtual meetings on 25th and 26th June, said the fiscal positions of the Centre and state governments were highly uncertain amid coronavirus outbreak. The advisory council also discussed the adverse implications of constraints in the economy on tax revenue collections. While noting that tax collections can be considerably affected by the pandemic, some members said the impact of the pandemic on tax collections might also be "asymmetric".
The Council members observed that after they met the Commission in April, the lockdown was extended and since then restrictions were being lifted in a phased manner, resulting in the gradual resumption of economic activities.
Many analysts and think-tanks have reduced their GDP growth projections for 2020-21. Due to ongoing social distancing measures in place and local level restrictions in many places, supply chains are not yet fully restored, which affect the recovery process, the council observed.
Implications on the deficits and debt of the general government were also discussed, along with constraints and possibilities for establishing a path for consolidation of public debt, post the pandemic. On the expenditure side, the governments will have substantial expenditure burden on account of health, support to poor and other economic agents.
The commission, along with the advisory council, will be closely monitoring emerging indications on the economic and fiscal front, it concluded.
This was the third meeting of the advisory council after the submission of the report of the 15th Finance Commission for 2020-21 and second such meeting since the onset of lockdown due to the COVID-19 pandemic.
The meeting was chaired by NK Singh, Chairman 15 Finance Commission, and all members and senior officials of the commission. From the Advisory Council, Krishnamurthy Subramanian, Sajjid Z Chinoy, Prachi Mishra, Neelkanth Mishra and Omkar Goswami and special invitee Rathin Roy attended the meeting on 25th June. Arvind Virmani, DK Srivastava, M Govinda Rao and Sudipto Mundle, Shankar Acharya and Pronab Sen attended the meeting on June 26.