The government, not the finance panel, will accept a special label for the states: president of the Finance Commission

NEW DELHI: The first report has been accepted by the government and is now working for 2021-2026. The panel president, N K Singh, spoke with Sidhartha of TOI about the way forward. Excerpts

Are you satisfied with the implementation since most of the recommendations have been accepted?

Acceptance of the report is a reaffirmation of the government's commitment to the principles of fiscal federalism that the Prime Minister Narendra Modi He has spoken repeatedly. He has allocated the necessary resources not only to accept the return prize, but also given this large increase in other segments.

It seems that some southern states are losing transfers from the Center to the states.

It has been our effort to recognize efficiency and progress. Performance has been rewarded and today's needs are being recognized.

There have been a series of demands to grant special category status. Looks like you put the ball on the center court.

This is not a random game of putting balls from side to side. This is outside the terms of reference of any finance commission. It is up to the central government to decide whether or not to award the status of a special category. If there were any doubts about the recommendations of the 14th Finance Commission, we have clarified that the issue of the special category, which emerged from the Gadgil award at the time the Planning Commission existed, was a decision of the National Development Council and not A finance commission decision.

The general return formula has been left virtually unchanged ...

Finance Commissions have never reduced the return to the states. The fourteenth Finance Commission had significantly increased the return, but in doing so, several other channels and channels through which the states received resources were also eliminated after the abolition of the Planning Commission. With everything in mind, we didn't want to alter the legacy and continuity.

Does that also mean that the formula will remain unchanged for the next five years?

We have clarified that, given the uncertainties of some key macro areas, our recommendations in the final report will undergo changes and adjustments in light of the data and subsequent analyzes.

The report speaks of a new law on tax issues that the 15th Finance Commission intends to write. What exactly is the plan?

There is an opinion that it is not only about adhering to the path of fiscal consolidation, but about the credibility of fiscal numbers, how exhaustive and detailed they are. To be fair, the finance minister has clarified that it is the same methodology that has been adopted over the years and successively. Our terms of reference state that we must analyze the debt and fiscal trajectory of central and state governments. I intend to create a group of experts to analyze this and also in a model legal framework to put in the best international position. We will see how we can put in a framework that allows better compliance with the tax liability law.

He has dealt with items out of budget. Is there an evaluation of the scale?

Evaluations have been made, but it is not fair to say that the Center has been in a deliberate deviation from not recognizing these responsibilities. Sometimes people who speak do not talk about assets. For example, we talk about FCI liabilities, but we don't talk about the fact that it is found in stacks of assets and food grains, which are not valued at zero.