Best of PIB: 23 Jan 2017

The committee on FRBM submits the report

  • The committee was set up by the government in May 2016
  • It is headed by Shri N K Singh. The other members of the committee are Urjit R. Patel (Governor, Reserve Bank of India), Shri Sumit Bose (former Finance Secretary), Dr. Arvind Subramanian (Chief Economic Adviser) and Dr. Rathin Roy (Director, National Institute of Public Finance & Policy)
  • The committee has submitted the report to the Finance Minister
  • The government will examine the report and take appropriate action

About FRBM Act

  • Bring down revenue deficit by 0.5% per year and eliminate it by 2007-08.
  • Bring down fiscal deficit by 0.3% per year and bring it down to 3% by 2007-08.
  • Central government not to provide guarantee (for more than 0.5% GDP) on the loans of PSU and state governments
  • Total liabilities of central government not to increase by more than 9% per year
  • Union Government would place three more documents along with the budget documents viz. Macroeconomic Framework Statement, Medium Term Fiscal Policy Statement and the Fiscal Policy Strategy Statement.
  • At the end of second quarter, the Finance Minister would make a statement on the trend of fiscal indicators and corrective measures taken thereof.

About the Terms of Reference (TOR) given to the committee

  • Review the functioning of the Act in the last 12 years and suggesting changes after taking into consideration contemporary changes, past outcomes, global economic developments, best international practices and to recommend the future fiscal framework and roadmap for the country
  • Review the factors that are taken into consideration in determining yearly targets
  • Whether to have fixed or a range for FD
  • Can the government re-align FD with the changes in the credit flow in the economy
  • Subsequently, the TORs were enlarged to seek the Committee’s views on certain recommendations of the Fourteenth Finance Commission and the Expenditure Management Commission (related to strengthening the institutional framework on fiscal matters as well as issues connected with new capital expenditures in the budget)