The finance ministry today said the government will set up a panel in a month to look into the feasibility of setting a range for fiscal deficit targets rather than a fixed figure.
"Considering the fact that FRBM is under implementation for the last 10 years, time has come to review the Fiscal Responsibility and Budget Management (FRBM) law. The finance minister has decided to form a committee and it will be constituted within a month or so," Economic Affairs Secretary Shaktikanta Das said at an Assocham event here.
The finance minister has remained committed to the fiscal deficit target for the current fiscal as well as for the coming fiscal, he clarified.
The government is expected to achieve fiscal deficit target of 3.9 per cent in the current fiscal and 3.5 per cent of GDP in 2016-17.
In his Budget speech last month, Finance Minister Arun Jaitley had said there is now a school of thought which believes that instead of fixed numbers as fiscal deficit targets, it may be better to have a fiscal deficit range as the target, which would give necessary policy space to the government to deal with ever-changing dynamics.
"There is also a suggestion that fiscal expansion or contraction should be aligned with credit contraction or expansion, respectively, in the economy. While remaining committed to fiscal prudence and consolidation, time has come to review the working of the FRBM Act, especially in the context of the uncertainty and volatility which have become the new norms of the global economy," he had said.
Despite slowdown in the global economy, Das said, India is expected to grow at 7.6 per cent in the current fiscal, which would get better at 8 per cent and cross that mark in years to come.
On managing government expenses beyond its resources, he said, "The bigger issue is how much of the (market) borrowing sustainability the government has and how much of the borrowing space the government should occupy in the market because if the government mops up all these resources, then nothing is left for the private sector."
Das added that the primary focus of the Budget has been agriculture and rural sectors, which also talks about re-invigorating public private partnerships (PPP).
The government has taken some key initiatives, including setting up of the Credit Enhancement Fund by LIC in the next few months, in this regard.
On the goods and services tax (GST) Bill, Das said it is before Parliament and the finance ministry is administratively ready to implement the comprehensive indirect tax law.
He is hopeful that it is passed in the current session of Parliament.
