Finance panel for 'calibrated' exit strategy from stimulus

13th Finance Commission's report tabled in parliament

PTI | February 25, 2010

The 13th Finance Commission has asked the government to adopt a "calibrated" strategy for withdrawing stimulus measures provided to spur the economy in the wake of the global economic crisis.

Although the Economic Survey has favoured providing further stimulus to the exports sector, the economic document also factors in the recommendations of the Finance Commission and said that the suggestions have to be taken on board in shaping the fiscal policy for 2010-11 and medium term.

The Commission recommended "a calibrated exit strategy from the expansionary fiscal stance of 2008-09 and 2009-10."

Both the Survey and the Finance Commission's report were tabled in Parliament on Thursday.

The Commission also recommended increase in states share to 32 per cent of Central tax proceeds from the current level of 30.5 percent.

"The share of states in net proceeds of shareable Central taxes shall be 32 percent every year for the period of the award (2010-11 to 2014-15)," said the Commission, headed by former finance secretary Vijay Kelkar.

The Commission also proposed that a new Fiscal Responsibility and Budgetary Management (FRBM) Act should have a space for relaxing targets of deficits on account of economic shocks.

"The FRBM Act needs to specify the nature of shocks that would require relaxation of the targets thereunder," the commission recommends.

The overall approach of the recommendations is to foster "inclusive and green growth promoting fiscal federalism," said the Survey.



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