Barking up the wrong tree

Strengthening the revenue forecasting system will yield better results than fixing deficit targets within a range

Recent media reports suggest that the Union government is reviewing the Fiscal Responsibility and Budget Management (FRBM) Act in view of the adverse impact of the Covid-19 pandemic on its finances. One of the proposals under study envisages the adoption of a flexible but range-bound fiscal deficit target, instead of a single number.

 The 15th Finance Commission, whose final report would be out later this month, is also credited with the view that setting a range of fiscal deficit targets is an idea whose time has come. Hence, the expectation is that the Budget for 2021-22 to be presented three months