FinMin to approach Cabinet for panel to fix deficit range

Finance Minister had in the 2016-17 Budget proposed to set up a committee to look into the possibility of fixing a range of fiscal deficit target

The finance ministry on Monday said it will approach the Cabinet for setting up of committee to fix range of fiscal deficit target.

“The first step was that in any fiscal management, we have to keep state governments on board... The Department of Economic Affairs will be moving a note. We will also be giving our inputs. We will see how the committee if formed... It will eventually go to Cabinet,” Finance Secretary Ratan Watal told reporters here.

The Centre, he said, wants to coopt the states in the process of setting up the fiscal deficit target.

“I have offered to, some of them (states) were enthusiastic, if somehow we can coopt them in the process. The co-option is understand the challenges and requirements, and then the Fiscal Responsibility and Budget Management committee can come out with new rules of game,” Watal said. Addressing the conference of state finance secretaries, he said there is a need to take a national view of the problem of fiscal deficit and “start looking at the general government deficits and the impact they have on the savings-investment equilibrium in our economy”.

The current FRBM law is in place for last 10 years and Finance Minister Arun Jaitley had in 2016-17 Budget proposed to set up a committee to look into the possibility of fixing a range of fiscal deficit target in view of the uncertainty in global economy.

The Minister also promised to set up a committee of experts to review the implementation of FRBM.

“We have done the consultation process and state governments are major stakeholders and we must have their views. We must keep them on board,” Watal said.

The government is expected to achieve fiscal deficit target of 3.9 per cent in the current fiscal and 3.5 per cent of gross domestic product in 2016-17.