Government Forms 5-Member Panel To Review Its Fiscal Targets

New Delhi: Facing the twin challenge of fiscal consolidation and safeguarding India against global economic decline and volatility, the government has announced a five-member committee led by Ex Revenue and Expenditure Secretary NK Singh that will review the Fiscal Responsibility and Budget Management or FRBM Act and examine the feasibility of flexible fiscal targets instead of fixed figures.

The committee will have Chief Economic Advisor Arvind Subramanian, former Finance secretary Sumit Bose, RBI Deputy Governor Urjit Patel and Director of National Institute of Public Finance and Policy, Rathin Roy as members.

It's a suitable assignment for NK Singh, a bureaucrat turned MP who quit the Janata Dal United or JD(U) and joined the BJP in 2014 ahead of the Lok Sabha polls.

Finance Minister Arun Jaitley had announced the idea of a committee in his budget speech this year. One of the key responsibilities of the committee apart from reviewing the working of the FRBM for almost 12 years will be to examine the viability of replacing a fixed fiscal deficit with a range for fiscal deficit targets. The target range is to give the government the policy space to deal with economic dynamics.

The government is expected to achieve the fiscal deficit target of 3.5 per cent of the GDP in 2016-17.

Government sources said the committee may get additional responsibilities if needed. The panel is expected to cover a wide spectrum of issues, ranging from indicators and government's debt position, the Indian Debt Market, household consumption and savings, lending of banks, Centre-state spending, prevailing trends, global economic, tax projections and macroeconomic situation and global growth forecasts. Although, it may have to elbow room to consult government departments and subject matter experts.

The Finance Ministry in a release said the government expects the panel to suggest a road map by re-looking at all the aspects and factors which determine FRBM targets.