FRBM PANEL MOOTS FISCAL COUNCIL
The Fiscal Responsibility and Budget Management (FRBM) committee has suggested setting up a fiscal council to oversee and verify the credibility of the government’s Budget numbers and fiscal targets for any given year. While the political leadership at the Centre is said to be comfortable with the idea, the bureaucracy is reportedly against it. The FRBM committee, headed by former Member of Parliament and former Revenue and Expenditure Secretary N K Singh, had submitted its report to Finance Minister Arun Jaitley on January 23. The report, which lays out a road map to achieve a fiscal deficit of 2.5 per cent of gross domestic product by 2023, could be made public before March 9, Business Standard has learnt. ARUP ROYCHOUDHURY writes
The Fiscal Responsibility and Budget Management (FRBM) committee has suggested setting up a fiscal council to oversee and verify the credibility of the government’s budget numbers and fiscal targets for any given year.
While the political leadership at the Centre is said to be comfortable with the idea, the bureaucracy is reportedly against it. The FRBM committee, headed by former Member of Parliament and former Revenue and Expenditure Secretary N K Singh, had submitted its report to Finance Minister Arun Jaitley on January 23.
The report, which lays out a road map to achieve a fiscal deficit of 2.5 per cent of gross domestic product by 2023, could be made public before March 9, the day Parliament reconvenes for the second half of the Budget session, Business Standard has learnt. Sources say that according to the committee’s report, the fiscal council, which, advisedly, will consist of non-government economists and experts, will be tasked with assessing whether the budgeted estimates announced in any given year are credible and achievable. Such an exercise can either be ex-ante (during the Budget preparation) or expost (once the Budget is presented).
“Take the example of disinvestment targets. They are never met. Are they always unrealistic and should the government budget for lower, achievable targets? The credibility of such numbers is what a fiscal council will deal with,” said an official.
If such a council is set up, it will study the credibility and feasibility of all numbers, including tax targets, spending on various schemes and subsidies, capital spending, the fiscal deficit and revenue deficit targets, non-tax revenue, among others. A second official said this particular proposal had been discussed in the Prime Minister’s Office as well. He added the political leadership in charge of economic policymaking was likely in agreement with the idea of such a body. However, a number of senior bureaucrats had not yet warmed up to it. Sources said the FRBM panel’s idea of a fiscal council stems from the fact that close to 80 countries have similar outfits to provide oversight to federal budgets and fiscal targets. In nearly 35 of these countries, such councils have total autonomy and, in some cases, decide the parameters within which the country will prepare its budget.