Finance Commission panel to examine separate funding mechanism for defence

Sukhoi fighter jets fly past as they rehearse for the Defence Expo 2020, in Lucknow. PTI

The Fifteenth Finance Commission has constituted a panel to examine whether a separate mechanism be set up for the funding of defence and internal security.

The five-member group, to be headed by Finance Commission Chairman N K Singh, comprise secretaries from the ministries of defence, home affairs and finance, besides a member of Commission.

"The mandate of the Group on Defence and Internal Security will be to examine whether a separate mechanism for funding of defence and internal security ought to be set up, and if so, how such a mechanism could be operationalised," the Commission said in a statement.

The Commission has already submitted its interim report to the President regarding devolution of tax receipts between the Centre and states/Union Territories.

The final report is expected later in the year.

Meanwhile, the sixth meeting of Advisory Council to the Commission was held to seek views of the participants on the report of the XV-FC for 2020-21, the formula for horizontal devolution of central taxes and other recommendations contained in the report.

Views on the outlook for nominal GDP growth for the period 2021-22 to 2025-26, tax buoyancy and other macro-economic parameters too was discussed.

"While discussing about the framework for vertical and horizontal devolution of taxes, the methodological innovations made in the Report were favourably commented upon," the Commission said in another statement.

The options for nominal GDP growth and resource mobilisation, as well as, the downsides and upsides to different possibilities therein were discussed in detail, particularly in the light of emerging global trends and patterns discernible in high-frequency, domestic indicators.

The centrality of strengthening the administration and technology platform of GST in ensuring fiscal balance of the Centre and the states was also emphasised.

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