The commission reviewed the emerging situation and the uncertainties relating to the behaviour of macroeconomic variables like real gross domestic domestic product, inflation and fiscal deficit.
Aside from this, the NK Singh-led commission reviewed its revenue modelling and expenditure outlay as these would change significantly under the impact of the Covid-19 outbreak and the ensuing lockdown.
“The FC also reviewed various assumptions for revenue modelling. The issue of reviewing the expenditure outlay, particularly in view of the necessity of both the Centre & the States meet their inescapable obligations through public outlay also came up during the discussions,” it said in a tweet.
Taking cognizance of the financial stress the states were facing, it decided to review the representation various states received and work on alternate scenarios and parameters.
Additionally, it was decided that some analytical work should continue even during the lockdown as not staying apprised of the emerging situation would impair the decision-making capabilities of the commission.
Last year, the government extended the term of the 15th finance commission and tasked it with recommending a fiscal road map for five years from FY21 to FY26. The commission was supposed to submit its final report by October 31.
Apart from a substantial review of decisions for the current and coming financial years, the commission would also have to account for the fact that government expenditure on Covid-19 containment and relief measures would trump fiscal deficit concerns.
On March 26, the government announced a slew of relief measures totaling Rs 1.7 lakh crore while the RBI has supported it with rate cuts and moratorium of loan repayments.
Finance minister Nirmala Sitharaman also hinted at a further package for relief to industry. All of which would significantly impact the fiscal deficit and the Centre’s finances.