Why bringing down revenue deficit to acceptable levels is a difficult task

The collapse of the economy following the Covid-19 outbreak may have dealt a body blow to efforts to achieve the targets set forth by the N K singh Committee on FRBM

While much commentary has been made on the fiscal deficit scenario of the Centre, little emphasis has been laid on the revenue deficit situation. Though part of fiscal deficit, revenue deficit assumes importance because of its non-capital generating nature. 

The N K Singh Committee on the Fiscal Responsibility and Budget Management (FRBM) review recommended that the Central government reduce its revenue deficit-to-GDP ratio steadily by 0.25 percentage points each year, to reach 0.8 per cent by 2022-23 from a projected value of 2.3 per cent in FY17. 

The panel said the distinction between revenue and capital accounts is, in fact,