The fourteenth Finance Commission said macroeconomic outlook is more optimistic and has assumed a nominal GDP growth rate of 13.5 per cent during 2015-16 to 2019-20 award period.
“In our view, global and domestic macroeconomic indicators signal an economic recovery in the country. We believe that the softening of global commodity prices, particularly oil prices, would have a tangible effect on both the fiscal and current account deficits,” the report said.
The resultant easing of inflation, coupled with the expectation of domestic policy changes to address structural constraints, indicate a more optimistic macroeconomic outlook in our award period, it added.
ADVERTISEMENT
Given the available growth forecast and our assessment of the prevailing macroeconomic situation, The Commission said it has assumed a nominal GDP growth rate of 13.5 per cent during the award period.
The Modi Government has accepted the 14th Finance Commission’s (FFC) recommendation that the Centre should transfer 42 per cent of divisible pool to the states, including taxes, grants and so on.