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Question

The major features of the recommendations of N.K.Singh Committee are:

1. It stipulated debt to GDP ratio of 60%
2. Proposed Debt Management and Fiscal Responsibility Bill to replace FRBM act
3. Provided for the grounds under which the government can deviate from the targets.

Which of the above statements are correct ?

A

1 only
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B

1 and 2
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C

1 and 3
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D

1,2 and 3
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Solution

The correct option is D
1,2 and 3
Acccording to the NK Singh Committee recommendations, the combined debt-to-GDP ratio of the centre and states should be brought down to 60 per cent by 2023 (comprising 40 per cent for the Centre and 20% for states) as against the existing 49.4 per cent, and 21 per percent respectively.

It also provided for the grounds under which the government can deviate from the targets.
1. Over-riding considerations of national security, acts of war, and calamities of national proportion and collapse of agriculture severely affecting farm output and incomes.
2. Far-reaching structural reforms in the economy with unanticipated fiscal implications.
3. A sharp decline in real output growth of at least 3 percentage points below the average for the previous four quarters.

The FRBM amendments also mentioned that the deviation from the stipulated fiscal deficit target must not exceed 0.5 percentage points in a year.

It also proposed a Debt Management and Fiscal Responsibility Bill to replace FRBM act.

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