New finance panel under Reddy to fix revenue deficit
The new panel, which will also have Planning Commission member Abhijit Sen, former finance secretary Sushma Nath, PMEAC member M Govinda Rao and former head of National Statistical Commission Sudipto Mundle, has to submit its report by October, 2014 so that the new policies are implemented for the next five years, starting April, 2015.
The main recommendation will be on the distribution between the Centre and the states of the net proceeds of taxes which are to be, or may be, divided between them as mandated in the Constitution, and the allocation between the states of the respective shares of such proceeds.
One of the main point the panel will look into is the "objective of not only balancing the receipts and expenditure on revenue account of all the states and the Union, but also generating surpluses for capital investment,” which means the Reddy panel will have to draw up a new roadmap for wiping off revenue deficit as it was done by the previous commission headed by Vijay Kelkar.
It will also assess the impact of the proposed Goods and Services Tax on the finances of Centre and states and a mechanism for compensation in case of revenue loss.
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