The thirteenth finance commission submitted its report
to President Pratibha Patil on Wednesday.
It has outlined its recommendations on new path for
fiscal consolidation apart from a fresh formula for
sharing of central tax proceeds with states. The panel,
headed by former finance secretary Vijay Kelkar, has
also shared with the government its assessment on new
indirect tax regime – goods and services tax (GST) –
apart from recommendations on oil bonds.
The recommendations would be operational for five years
beginning April 1, 2010. The report will now be tabled
in Parliament during the budget session.
Later in the day, finance minister Pranab Mukherjee said
the commission recommendations would be reflected in
budget for the next financial year. “There is a system.
The report will be tabled in Parliament as per the
system. After that, the report recommendations will be
reflected in the budget,” said Mukherjee.
The commission was constituted on November 13, 2007
under Article 280 to determine sharing of tax revenues
between the centre and states. The twelfth finance
commission had set this ratio at 30.5 per cent. Kelkar
panel was also asked to make recommendations on impact
of oil, food and fertiliser bonds on central
government’s finances. The commission was mandated to
suggest a revised roadmap to maintain fiscal
consolidation through 2010-2015.
“The commission has recommended a new path for fiscal
consolidation for 2010-15,” said Kelkar. The suggestions
include measures to improve public spending pattern.
Fiscal deficit, or government borrowing, is estimated to
touch 6.8 per cent in 2009-10, which the finance
minister and other government officials have repeatedly
called unsustainable.
Kelkar said that the commission has made no
recommendation on the proposed GST regime. “There is no
recommendation on the tax structure or tax rates of GST,”
he said.
