Govt may delay implementation of NK Singh committee report
NEW DELHI: The finance ministry may have pushed back implementing the new fiscal consolidation road map recommended by the NK Singh committee by two years after it asked the 15th Finance Commission to be chaired by Singh to dwell on the same matter.
While the NK Singh committee recommendations on fiscal discipline were supposed to come into force in the next fiscal starting April 2018, the 15th Finance Commission recommendations will be implemented starting April 2020.
The fiscal responsibility and budget management (FRBM) review committee headed by NK Singh had recommended a fundamental shift in fiscal consolidation by targeting overall government (states + centre) debt which the rating agencies track rather than the current practice of focusing on the centre’s fiscal deficit.
In the FFC’s terms of reference released on Monday, the finance ministry said: “The Commission shall review the current status of the finance, deficit, debt levels, cash balances and fiscal discipline efforts of the Union and the states, and recommend a fiscal consolidation road map for sound fiscal management, taking into account the responsibility of the central government and state governments to adhere to appropriate levels of general and consolidated government debt and deficit levels, while fostering higher inclusive growth in the country, guided by the principles of equity, efficiency and transparency.”
The move is expected to give finance minister Arun Jaitley more leeway to decide the fiscal deficit levels for the current and next fiscal year while he presents his fifth and last full budget on 1 February. This could mean putting off meeting the fiscal deficit target of 3% of GDP for 2018-19 by a year or two.
Jaitley has recently hinted at a recalibration of the fiscal consolidation road map, vowing to continue with the glide path. “No pause (on fiscal consolidation) but challenges arising from structural reforms... could change the glide path,” Jaitley said at the annual Asia Pacific summit organised by Morgan Stanley in Singapore last week.
Economic affairs secretary Subhash Chandra Garg has said that meeting the fiscal deficit target of 3.2% in 2017-18 is a challenge given the structural reforms such as implementation of GST. The government will take a final decision whether to borrow more this year after analysing the revenue collection figures in December, he added.
Revenue collected from GST for October at ₹83,346 crore was the lowest since its implementation starting July 1. While the government is expected to overshoot its disinvestment target of ₹72,500 crore for the first time, there could be a shortfall in nontax revenue collection due to lower dividend transferred by the RBI and lower telecom spectrum proceeds.