The Finance Committee sets up a group of experts to prescribe a new fiscal consolidation roadmap for the center and the States
To prescribe a new debt and public finance consolidation roadmap for the center and the states over five years from April 1, 2021, the 15th Finance Committee (FFC) formed a committee chaired by NK Singh.
The members of the Committee include AN Jha and Dr Anoop Singh, members of the FFC, one each representing the Office of the Comptroller and Auditor General of India and the Comptroller General, the Assistant Secretary (Budget) of the Department of the Economy Business at the Ministry of Finance. Economists Sajjid Z. Chinoy and Prachi Mishra will also be part of the committee as external members. S. Krishnan, Additional Chief Secretary of the Government of Tamil Nadu and Anirudh Tiwari, Principal Secretary of the Government of Punjab, will also serve as representatives of the state governments.
The FFC submitted its first report to the government for the period 2020-2021. It has an extension until October 30 to submit its final report covering fiscal years 2021-22 to 2025-26 (April-March).
“The Committee makes recommendations on the definition of deficit and debt for the central government, all states, general government and public sector enterprises by considering all explicit and measurable liabilities of the state and in aligning the definition of debt (stock) and deficit (flow), “said the FFC in a press release.
Mint reported on February 14 that FFC can also prescribe a set of conditions under which states can also invoke an “escape clause” to exceed their mandatory budget deficit target by half a percentage point, giving them flexibility react to economic shocks in the same way as the available option. Under the Fiscal Responsibility and Fiscal Management Act (FRBM), states are required to maintain their budget deficit at 3 percent of gross domestic product.
The Committee will also establish the principles to arrive at the debt of the debt of the general government and the consolidated public sector in order to avoid double counting.
“The Committee will define contingent liabilities, provide quantifiable measures of those liabilities, to the extent possible, and specify the conditions under which ‘contingent’ liabilities become ‘explicit’ public sector liabilities,” said the FFC.
A team from the National Institute of Public Finance and Policy will provide analytical and data support to the committee while the economic division of the finance committee secretariat will facilitate and support the work of the committee.
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