N.K. Singh panel on revising the Fiscal Responsibility and Budget Management Act has submitted its report to the government.
The five-member committee — including Reserve Bank of India Governor Urjit Patel, former Finance Secretary Sumit Bose, Chief Economic Advisor Arvind Subramanian, and National Institute of Public Finance and Policy Director Rathin Roy — was constituted in May 2016 to review the Fiscal Responsibility and Budget Management Act.
The key recommendations are likely to be announced in the budget, while the full report will be released later.
The panel had been mandated to explore the option of moving to a flexible fiscal deficit target instead of targeting a fixed number every year. It is not clear whether the panel has used the fiscal deficit or the revenue deficit as the metric to define the path.
After deciding to stick to the fiscal deficit target of 3.5% of gross domestic product for 2016-17, finance minister Arun Jaitley in last year’s budget proposed an expert group to amend the FRBM Act.
Fiscal management becomes all the more important post-demonetisation and the resultant slump in consumption expenditure. The view is that the government could be tempted to increase public spending to boost consumption.
Mr Jaitley will present the Budget for 2017-18 on February 1.
Mr Singh explained that the first volume of the report dealt with the issues of fiscal policy, fiscal roadmap, international experience and the recommendations on these issues.
Volume 2 is on the international experience, Volume 3 deals with the Centre and states, and Volume 4 incorporates papers by lots of experts.
The government has set a fiscal deficit target of 3.5% of GDP for FY17, a lower target than the 3.9 per cent set for 2015-16, which was achieved.