NEW DELHI: Fifteenth Finance Commission Chairman N K Singh on Friday said that the government should put aside fiscal concerns and should instead focus on reviving growth. According to the Singh, there is an acute pressure on both the centre and state governments’ finances currently due to poor revenue growth and increasing expenditure.
“This year we must not concentrate on the fiscal or the debt. We must concentrate on the fastest possible revival of the economy. We must concentrate on ensuring that in terms of the painful transition, the pain is minimised in multiple interventions, and multiple interventions have taken place,” Singh told reporters after the meeting of the commission with the economic advisory council on Friday.
He also went on to say that the finance ministry itself has increased their borrowings from the Reserve Bank of India and added that state governments were also going to borrow more. Rating agencies have projected India’s fiscal deficit (combined Centre and states) to be around 11-12 per cent of GDP in current fiscal, while government debt is expected to touch 84 per cent of GDP from 71 per cent last fiscal.
“Where we will end up in terms of fiscal numbers this year, I cannot say. Part of the reason is that I cannot say that the pandemic has played itself out fully...,” Singh said. Data released last month showed the central government’s fiscal deficit had surged to 78 per cent of Budget estimates at `2.79 lakh crore in April as tax revenues slumped on account of the nationwide lockdown.
Singh noted that one of the suggestions by the advisory panel was to overlook the present year and choose the following year (2021-22) and look at the skewed likely second quarter results to make projection.
Meanwhile, the Ministry of Rural Development (MoRD) has cited a liability of Rs 51,552.88 crore to maintain rural roads this fiscal and has requested the finance commission to include the maintenance of roads while considering grants under the Pradhan Mantri Gram Sadak Yojana.
The ministry has projected a requirement of Rs 82,946 crore for 5 year. “According to census of 2011, 45,614 habitations of population 250+ are unconnected as of now. The burden of connecting the balance unconnected has a financial implication of Rs 1,30,000 crore,” the ministry said.
GST compensation to widen govt debt
Any borrowing by the GST Council to make good the shortfall in states’ revenue would add to the debt of both central and state governments, Finance Commission chairman N K Singh said. “My understanding... is that the borrowing of the Centre is upon the security of the Consolidated Fund of India. ... (so are) borrowings by state governments... as far as any of borrowing is concerned, it must ultimately reflect on general government debt,” he said.