A building-block Budget
Gives a push to capex while easing fiscal consolidation
Based on the recommendations of the Fifteenth Finance Commission, the Central government has agreed to amend the FRBM Act. The deficit and debt targets of the existing Act have been rendered irrelevant due to the impact of the pandemic and the longer-term erosion of tax and non-tax revenues relative to GDP. Given these economic realities, the Central government has substantially raised its fiscal deficit-to-GDP ratio for the period 2020-21 (RE) to 2025-26.
In 2020-21 (RE), the fiscal deficit has been raised to 9.5 per cent of GDP and that in 2021-22 (BE), to 6.8 per cent. It may then gradually be brought down to 4.5 per cent by 2025-26. Largely based on this additional borrowing, the government proposes to increase its revenue expenditure by 28.1 per cent in 2020-21 (RE) over the actuals of 2019-20, and capital expenditure by 30.8 per cent over the same period. However, compared to these RE numbers,
15th Finance Commission recommends maintaining vertical devolution at 41 pc ANI | Updated: Feb 01, 2021 21:08 IST
New Delhi [India], February 1 (ANI): In order to maintain predictability and stability of resources, especially during the pandemic, the report of 15th Finance Commission (FC) on Monday recommended maintaining the vertical devolution at 41 per cent, the same as in its report for 2020-21.
The 15th FC s report, with 117 core recommendations, was tabled in Parliament on Monday.
According to an official release of Finance Ministry, the vertical devolution is at the same level of 42 per cent of the divisible pool as recommended by 14th FC. However, it has made the required adjustment of about 1 per cent due to the changed status of the erstwhile State of Jammu and Kashmir into the new Union Territories of Ladakh and Jammu and Kashmir.