The N K Singh panel has suggested a liberal approach on fiscal consolidation to ensure that the government's power to spend on development is not restricted even as its member Arvind Subramanian, CEA, has expressed some reservations on certain aspects of the report.
The panel headed by former Revenue Secretary submitted its four-volume report on modifying the 13-year old Fiscal Responsibility and Budget Management (FRBM) Act to Finance Minister Arun Jaitley yesterday.
According to sources, there were some reservations of a member on some points, not on the entire report.
They said Subramanian, Chief Economic Adviser, has given a dissenting view stating that the main focus of the government should be the primary deficit and not fiscal deficit.
In the mid-year economic review last year, he had made a case for relaxing fiscal deficit target to push growth.
However, Jaitley pursued the fiscal consolidation roadmap in the budget and kept the target for 2016-17 at 3.5 per cent of GDP.
The panel has also suggested improvement in computation of public debt and deficit.
According to sources, the committee has taken a liberal view on fiscal consolidation amid enhanced global uncertainty and volatility in the currency market.
Since the recommendations of the report are being utilised for Budget making it has not been made public. Jaitley will be presenting the Union Budget for 2017-18 on February 1.
"The government will examine the FRBM Committee Report and take appropriate action," the Finance Ministry had said.
Other committee members were RBI Governor Urjit R Patel, former Finance Secretary Sumit Bose, and Director of NIPFP Rathin Roy.
When asked when the report would be made public, Singh had said "that is in the hands of the government, whether they wish or do not wish to make it public".
Among other things, the Committee was asked to examine the need and feasibility of having a 'fiscal deficit range' as the target in place of the existing fixed numbers (percentage of GDP) as the goal.
The first volume of the report addresses the issue of the fiscal policy, fiscal roadmap, international experience and recommendations therein.
Volume two refers to international experience while the third volume deals with Centre-State issues. The fourth volume deals with domain experts' views on fiscal consolidation.
The Committee had wide ranging Terms of Reference (ToR) to
comprehensively review the existing FRBM Act in the light of contemporary changes, past outcomes, global economic developments, best international practices and to recommend the future fiscal framework and roadmap for the country.
It was originally slated to submit the report by October 31. However, the terms were enlarged to seek the panel's views on certain recommendations of the 14th Finance Commission and the Expenditure Management Commission.
These primarily related to strengthening the institutional framework on fiscal matters as well as issues connected with new capital expenditures in the budget.
The committee was set up to review the working of FRBM Act over the last 13 years and suggest the way forward "keeping in view the broad objective of fiscal consolidation and prudence and the changes required in the context of the uncertainty and volatility in the global economy".
