Mains Paper 2: Polity | Appointment to various Constitutional posts, powers, functions and responsibilities of various Constitutional Bodies
From UPSC perspective, the following things are important:
Prelims level: Fiscal Council
Mains level: Mandate of the finance commission
- Stressing on the need to have uniform rules for fiscal consolidation of States and Centre 15th Finance Commission’s Chairman NK Singh called for institutional mechanism like a ‘Fiscal Council’ to enforce fiscal rules and keep a check on Centre’s fiscal consolidation.
A check over borrowings
- For state government liabilities, Article 293 (3) provides a constitutional check over borrowings.
- But there is no such restriction on the Centre.
- It is time we have an alternative institutional mechanism like Fiscal Council to enforce fiscal rules and keep a check on Centre’s fiscal consolidation.
- Singh had earlier proposed creation of an autonomous Fiscal Council with representatives from both states and Centre, but the recommendation was not implemented.
Why need Fiscal Council?
- Various cesses and surcharges are becoming disproportionate proportion of overall divisible revenue.
- There should be some mechanism to ensure that the basic spirit of the devolution process should not be undercut by clever financial engineering or taking recourse to traditions.
- There is a need for coordination between the finance commission as well as the GST Council, which he termed as the only federal institution in the country.
- There’s need for coordination between Finance Commission and GST council.
- GST Council has no clue of what the Finance Commission is doing and Finance Commission has even lesser clue of what the GST Council is doing.
The municipal example
- It is very clear that successful economic growth, successful good quality employment depends on agglomerations that work.
- That in turn is going to depend on whether municipalities have enough revenue.
- What the municipalities get today in terms of revenue is one per cent of GDP whereas on comparative basis, looking at other emerging market countries, it really ought to be 5 per cent of GDP.