Days ahead of the Union Budget 2017-18, a high level committee has called for an complete overhaul of the Centre’s fiscal consolidation roadmap and is understood to be against aggressive fiscal consolidation.
Though NK Singh, who chaired the committee on Fiscal Responsibility and Budget Management, did not give details about the recommendations of the report, he said it deals with issues of debt and deficit.
Sources said the recommendations of the report will be incorporated in the Budget to be presented on February 1, while some may be rolled out later in the year.
“We have submitted the report. It is up to the government to make its recommendations public,” said Singh after the Committee submitted its report to Finance Minister Arun Jaitley on Monday.
Titled ‘Responsible Growth – Debt and Fiscal Framework’, he said the four-volume report has also tried to address State-level fiscal concerns. The first volume refers to the fiscal roadmap while the second includes the experience of international bodies on fiscal consolidation. The third volume contains presentations of the Centre and States, while the fourth has views of international domain experts on fiscal consolidation.
“The original and revised terms of reference have been addressed by the FRBM panel. The report also includes views of international agencies like the OECD, World Bank, ILO and United Nations,” said Singh.
The Centre has targeted reducing the fiscal deficit to 3.5 per cent of the GDP in 2016-17 and then lowering it further to 3 per cent in the next fiscal. Sources said the committee has suggested containing the deficit at about the current level between 3.5 per cent and 3 per cent.
“The Committee held extensive consultations with a wide range of stakeholders. It also received inputs from eminent national and international organisations and domain experts,” said the Finance Ministry in a statement.
The five-member committee was set up by the Finance Ministry in March and was originally expected to submit its report by October 31, 2016, which was later extended to November 20. Apart from Singh, the committee included Urjit R Patel, RBI Governor; Sumit Bose, former Finance Secretary; Arvind Subramanian, Chief Economic Adviser and Rathin Roy, Director, National Institute of Public Finance & Policy as members.
It had been asked “to examine the need and feasibility of aligning the fiscal expansion or contraction with credit contraction or expansion respectively in the economy” and also tasked with examining whether there is a need for a range based target for the fiscal deficit in place of the current practice of pegging the deficit as a fixed percentage of the GDP.