Chennai: The working relationship between the GST Council and the Finance Commission needs a closer look, said Chairman of the 15th Finance Commission N.K. Singh here on Monday.
Delivering the Fifth G. Ramachandran Memorial Lecture, Singh said the working of GST Council is still in its nascent stage.
Pointing out that the Finance Commissions recommend the devolution of revenue, he posed but how are they to ensure that the revenues available to them are optimised?
Singh said GST tax rates, their exemptions, their changes, their application and implementation are entirely within the domain of the GST Council.
"Who is to monitor, scrutinise and evaluate the best outcomes? Since both are constitutional bodies, a working relationship between the GST Council and the Finance Commission deserves closer consideration," he said.
Singh said the 15th Finance Commission has been appointed when there have been other significant changes in India's fiscal framework.
"The Planning Commission which had overarching power on overseeing and monitoring development of states was abolished. It has been replaced by NITI Aayog whose functions are not connected with the financial devolution," he said.
"The distinction between plan and non-plan expenditure has also been removed from the Union budget. So transitional arrangements are still under evolution."
Reflecting on the institutional mechanism for a federal polity, Singh said the Inter-State Council needs to be restructured and rejuvenated. It must emerge as the key institution to manage inter-state frictions.
According to Singh, the Inter-State Council should have regular meeting schedule and have a permanent active secretariat.
"Since Prime Minister is the Chairman of the NITI Aayog and the Home Ministry's primary function is an internal security, the Inter State Council should function as part of the Prime Minister's Office," he said.