Explore Business Standard
RATHIN ROY, member of the NK Singh committee on a new Fiscal Responsibility and Budget Management (FRBM) law and Director, National Institute of Public Finance and Policy, talks to Arup Roychoudhury on their recommendations. Edited excerpts:The committee has recommended a debt to GDP ratio of 60 per cent for governments in general by 2023. This comprises 40 per cent for the Centre and 20 per cent for states. Given the current debt levels, does adopting this path mean the burden of reducing the public debt falls squarely on the Centre? No. For reasons elucidated in the report, states, collectively, will have to consistently reduce their fiscal deficits by at least 0.16 per cent of GDP each year, to maintain the current debt level at 20 per cent. The path for individual states can be specified by the 15th (next) Finance Commission and the government can take a view on the extent of fiscal consolidation to be undertaken in the interim.The committee has recommended maintaining the ...