The finance ministry will soon decide on the NK Singh panel’s recommendations on fiscal management, a senior official said on Thursday. The government will calibrate measures suitably to trim fiscal deficit, which could also impact the debt level, he added.
The panel has suggested that the Centre should aim for a fiscal deficit of 3% of the GDP for three straight years starting the current fiscal and gradually reduce it to 2.5% by 2022-23 and partner states in adhering to fiscal discipline. The panel’s recommended fiscal deficit for 2017-18 is lower than the Centre’s budgeted target of 3.2%, although the government intends to lower it to 3% from the next fiscal.
The panel’s report was unique in the sense it kept debt, along with fiscal deficit, in the center of fiscal management principles, moving away from the current practice of targeting only fiscal deficit. It suggested a ceiling for general government (both the Centre and states) debt of 60% of GDP by 2022-23.
This council will be tasked with preparing multi-year fiscal forecasts for central and general government, firming up a debt and fiscal sustainability analysis that makes projections on key fiscal indicators and providing an independent assessment of the Centre’s fiscal performance and compliance with targets set under this Act, among others, it had said.
There is some stress in the financial sector, especially the banking system, the official said, adding, that’s an area where lot of action is required.