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Q. "This (GST Council) was about indirect taxes. Time has now come for a similar body on public expenditure to do exactly what the GST Council did for taxes". Comment
Posted on 2019-08-19 20:34:42
https://indianexpress.com/article/business/economy/pm-economic-advisory-council-need-to-set-up-gst-council-like-body-for-public-spending-5915850/

https://www.youtube.com/watch?v=eZH-KsFWDNM&list=PLVOgwA_DiGzoqQsGjmamTu6f453RWpm_I&index=1

"జి ఎస్ టి కౌన్సిల్ పరోక్ష పన్నులకోసం ఏర్పాటు చేయడమైనది. ఇలాంటి సంస్థ ను ప్రభుత్వ వ్యయంపై కూడా ఏర్పాటు చేయడానికి సమయం ఆసన్నమైనది". వ్యాఖ్యానించండి 
MOHAN NALLAMILLI
Q. "This (GST Council) was about indirect taxes. Time has now come for a similar body on public expenditure to do exactly what the GST Council did for taxes". Comment
# 1
Replay on 20-08-2019 21:28:37
The idea of a Public spending or expenditure council was proposed by the Finance minister of previous government which was recently brought out again by the chairman of Prime Minister’s Economic Advisory Council.

Need for such a body -

  • During the existence of planning commission it used to coordinate with states through meetings to ensure consensus, quicker decisions, direction of use of public expenditure along with efficiency. This mechanism is dismantled with abolition of planning commission in 2015
  • NITI Aayog seems not very effective in dealing this issue of public expenditure as it is projected more of a think tank.
  • The entire burden now fell on Finance ministry in deciding the finances needed for states
  • There are changes in structures such as 5 year plans, plan and non plan expenditures which used to be guidelines for public expenditure.
Role of a Public spending council in the present scenario -

  • Suggest regarding prioritization of expenditure of states
  • Council need to reach each state to know ground realities and have detailed discussions on the issues with spending to provide proper guidance or directives
  • Advisories can be restricted to subjects which will have national priorities such as education, health i.e., subjects in concurrent list 
  • Specific ministry wise councils can be formed to ensure better coordination between central and state schemes which brings efficiency in public spending
  • Council can study the need based spending requirements of each state to optimize the expenditure requirements
  • Speed and scale of decision making can be improved with better coordination
However, there are few challenges in establishing such a council -

  • GST council dealt only with taxation which involves one or two ministries but expenditure is done by all the ministries in each state which makes such a council humongous and unviable.
  • Expenditure is everyday affair to solve the problems such as land acquisition, delays etc which can't be dealt through a monthly or quarterly meetings of the council
  • Top down or one size fits all kind of interventions from such a council will not resolve the spending issues
  • Many subjects on public expenditure falls under state list or concurrent list, so states wont give up their sovereignty powers
  • The voting mechanism can be biased towards the party at centre if it has support of states ruled by them like GST council
The idea of having such a council is good and need of the hour but there must be proper structure, voting mechanisms to prevent unilateral decision making. A two tier system with central finance minister and NITI Aayog engaging with states along with specific ministry wise sub - councils can be looked into to ensure streamlining of public expenditure and smooth transition to the 15th finance commission period.

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