Centre committed to maintaining fiscal discipline: Fin Secy

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SME Times News Bureau | 14 Apr, 2017
Union Finance Secretary Ashok Lavasa on Thursday said the government is committed to maintaining fiscal discipline and would continue to find resources to meet the development requirements, following the FRBM panel's suggestion for a new fiscal roadmap recommending it to target a fiscal deficit of three percent by 2020.

The N.K. Singh Committee, which had submitted its report in January but that was placed in the public domain on Wednesday, has not only recommended a three percent fiscal deficit for the next three years but also provided for aEscape Clauses', for deviations up to 0.5 percent of GDP, from the stipulated fiscal deficit target.

"...have to see the recommendations in its spirit and context. We will, of course, examine it, the greater details to understand the circumstances that the panel has envisaged. The government can exercise the escape clause. But the government committed to maintain the fiscal discipline and the same time, the government would like to find resources to meet the development requirements," he said.

"The escape clauses the panel has suggested have to be seen in specific context after making an assessment of what the circumstances warrant," he told BTVi in an interview.

The committee was asked to review the contours of the Fiscal Responsibility and Budget management (FRBM) Act passed in 2003 that commits the central government and the states to end their revenue deficits and put caps on their fiscal deficits.

The central government pegged the fiscal deficit for 2017-18 at 3.2 percent of GDP.

"We will reduce the fiscal deficit by 20 bps (basis points) in the next year and then, there is a pause. I think the pause is necessitated by the fact that in a developing economy, there are multiple developments of social sector, agriculture spending and the infrastructure requirement. It does create some space for public spending to increase for those years," Lavasa said.

He said the revenue deficit figures are down in the last financial year and the government hoped the revenue deficit to be maintained within the limits.

Union Finance Minister Arun Jaitley in his budget speech had said the revenue deficit of 2.3 percent in budgetary estimate of 2016-17 was reduced to 2.1 percent in the revised estimates.

The revenue deficit for 2017-18 was pegged at 1.9 percent, against 2 percent mandated by the FRBM Act.