Centre to set up 16th Finance Commission by November end: Finance secretary

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leadership of N K Singh. It had kept the tax devolution ratio at 42 per cent -- at the same level suggested by the 14th Commission. The central government had accepted the report of the commission, and accordingly, the states were provided with 42 per cent of the divisible tax pool of the Centre during the period 2021-22 to 2025-26.

The 15th finance commission's recommendations also included the fiscal deficit, debt path for the Union and states, and additional borrowing room to states based on performance in power sector reforms. As per the glide path for fiscal consolidation, the government will strive to cut down the fiscal deficit to 4.5 per cent of gross domestic product (GDP) by the 2025-26 fiscal. For FY 23-24, the the deficit is projected at 5.9 per cent of GDP, which is lower than 6.4 per cent target set for the last FY ended in March 31, 2023.

T V Somanathan also said that the government will stick to the fiscal deficit target of 5.9 per cent of the GDP as robust tax, non-tax collections will help meet the spending requirement and make up for any shortfall in disinvestment proceeds. The shortfall with respect to disinvestment would be met by non-tax revenue mobilisation, he added. "Disinvestment target is unlikely to be met.

However, I would say in aggregate the collective amount between disinvestment and non-tax revenue is likely to be very close to the budget," he said. The total of disinvestment receipts, plus non-tax receipts are likely to be very close to the Budget Estimates, he said. "We expect to adhere to our fiscal deficit target this year...none of the events so far have caused anything for us to deviate from it," he said.