Finance Commission and CAG Collaborate to Transform India's Fiscal Framework

The Comptroller and Auditor General of India (CAG) met with the Sixteenth Finance Commission in Bhopal to discuss critical fiscal reforms. Key areas included tax revenue enhancements, GST administration improvements, and better financial management of public sector enterprises and local bodies, aiming for effective resource allocation and fiscal transparency.

In a significant move to enhance the fiscal health of the nation, the Comptroller and Auditor General of India (CAG), K Sanjay Murthy, conferred with the Sixteenth Finance Commission under the chairmanship of Arvind Panagariya. The high-profile meeting took place in Bhopal, Madhya Pradesh, with the primary focus on Union and State Finances, Local Bodies, and Public Sector Enterprises (PSEs).

The CAG presented critical audit findings that highlighted fiscal challenges, emphasizing the importance of narrowing the expenditure-receipt gap and addressing declining state tax revenue buoyancy. Highlighting untapped revenue sources, the CAG suggested utilizing modern technologies like sensor-based systems to bolster revenue collection, particularly in areas such as stamp duty and state excise collections.

The discussions also delved into Goods and Services Tax (GST) administration, recommending reforms to widen the tax base and enhance transparency. These include integrating unregistered entities into the GST framework through automated data collection and improving taxpayer verification. The CAG also pushed for standardized accounting practices to ensure transparent fiscal information availability, advocating harmonized local, state, and central financial records.

Moreover, strategies such as establishing Budget Stabilization Funds for financially stable regions were proposed to mitigate fiscal disruptions. Ensuring better financial governance of local bodies and addressing inefficiencies in State Public Sector Enterprises were also key topics. Overall, the CAG's engagement offered a strategic roadmap aiming to boost fiscal transparency, performance, and long-term consolidation at every governmental level.

Finance Commission Chairperson Arvind Panagariya commended the CAG's insights for their potential in shaping robust fiscal recommendations.

(With inputs from agencies.)