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FRBM Panel Report Likly On Monday

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panel tasked with recommending a future fiscal roadmap,and whose recommendations are likely tobe incorporated in the coming Union Budget 2017-18,might present its report to Finance Minister Arun Jaitley on Monday.The Fiscal Responsibility and Budget Management (FRBM) committee is chaired by NKSingh,a former member of Parliament and andan ex-revenue and expenditure secretary.The report was to have been or iginally give non October30.That was postponed more than once,after,in turn,being told to consider some recommendations of the 14th Finance Commission,seek the opinion of the Reserve Bank and study the impact of demonetisation
Apaneltaskedwithrecommendingafuture fiscalroadmap,and whoserecommendationsare likelytobeincorporatedinthe comingUnionBudget2017-18, mightpresentitsreportto FinanceMinisterArunJaitley onMonday.
TheFiscalResponsibility and Budget Management(FRBM) committeeischaired byNKSingh,aformer memberofParliament andandanex-revenueand expenditure secretary. The reportwastohavebeenoriginallygivenonOctober30. That was postponed more thanonce,after,inturn,being toldtoconsidersomerecommendations of the 14th FinanceCommission,seekthe opinionoftheReservebank and study the impact of demonetisation.
OnFebruary1,Jaitleyis expectedtopresentapopulist BudgetastheNarendraModi governmentlookstonegate theeffectofapossibleslowingineconomicactivitydueto demonetisation.Onthecards aresopsandhigheroutlayfor micro, small and medium enterprises,agriculture,affordablehousingandathrustfor thesocialsector,infrastructureandjobcreation. The current FRBM roadmapsetsthefiscaldeficit targetfor2017-18atthreeper centofgrossdomesticproduct.Theexistinglawislikelyto beamendedorreplacedwitha newone,basedonthepanel’s recommendations.
Sourcesbelievethepanel will recommend a looser deficittargetfor2017-18,closerto3.5percentofGDP,the same as the current year. And,provideascheduleofsix to eight years to reach a desiredlevel,withflexibility in between for varying of spending.
Itcouldpanelalsosuggest pausesingettingtothetargets.Thecurrentschedule mandatesconsecutivereductionsinthegapbetweentotal expenditureandtotalrevenue. “Apausewouldmeanthatif the minister achieves the deficittargetforanygiven year,hecanstayatthatnumberasapercentageofGDPfor acoupleofmoreyearsbefore reducingitfurther,”saidan official.Asreportedearlier,the FRBMpanelisexpectedtorecommendcertainconditions underwhichextraspendingis necessary. These could include macro economic headwinds,naturaldisasters orincaseofwar.
Business Standard New Delhi,20th January 2017

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