The Fifteenth Finance Commission (XVFC) had online meetings with its Advisory Council on 23-24 April 2020. The meeting was chaired by N. K. Singh, Chairman XVFC, and was attended by all members and senior officials of the Commission.
Highlights:
♦ The Members of the Advisory Council discussed the impact of the COVID-19 pandemic and the national lockdown on the Indian economy.
♦ The officials discussed the impact of the pandemic on financial institutions and business enterprises and the loss of global demand for Indian products because of a steep global recession.
♦ Discussions on measures to restore the supplies of intermediates and cash flows and the demand for output.
♦ Small scale enterprises were cash-starved even prior to the onset of COVID-19.
♦ The Council devised a support mechanism to help the activity levels and cash flows to overcome the economic issues caused by the COVID-19 pandemic.
♦ Currently, the activity levels and cash flows are affected, it is important that a support mechanism is devised to help them overcome this problem.
♦ To help Non-banking financial companies (NBFCs) which are also affected by the slowdown, the commission planned to deepen the NPAs in the financial sector and introduce measures to guarantee help.
♦ The council planned to seek Reserve Bank of India’s (RBI) help to ensure that financial institutions are well-capitalized.
♦ The finances of the Central and State Governments will be given adequate provision to largely help governments to manage cash-flow mismatches. It aims to ensure that the State governments get access to adequate funds to undertake their fight against the pandemic.
♦ The Council decided to support the revival of activity in different States which will be at a varied pace.
