The Covid-19 pandemic has been the biggest shock to the global economy post WW-II. The FC-XV acknowledged that there will be an increase in the spending needs of both levels of governments in Covid times but maintained that there is a need for a clear medium term fiscal consolidation path for long term fiscal sustainability. The FC-XV has provided additional space for borrowings to the state and also encouraged greater transparency regarding off-budget borrowings at the state level. They provided an ‘indicative’ fiscal consolidation path given the prevailing uncertainties and recognised the need for restructuring the FRBM framework by a high powered Inter-governmental group. The Webinar will discuss implications of Post-Covid fiscal architecture in light of the FC-XV’s recommendations.

Since transfers to States based on recommendation of the Finance Commission constitute more than 60% of the total transfers to States, there is a need to understand the implications of the recommendations of the FC-XV on individual States in terms of progressivity, fiscal stability and fiscal space. Given the fiscal challenges imposed by the Covid-19 pandemic, FC-XV recommendations assume greater significance. This webinar will discuss the implications of the recommendations of the FC-XV on the fiscal space of both the Union government and the State governments. It will also examine the issue of horizontal equalisation addressed by the Finance Commission and will review the public finance management and fiscal transparency issues at the State and Union level recommended by the FC-XV.