DMPQ: Fiscal solidarity is key to foundation of a strong economy. N k singh committee was set up to head a fiscal responsibility and budget management panel? Discuss the features of the act. ( Economic reforms)

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FRBM act was brought to bring fiscal discipline in the Indian fiscal milieu. But the objectives of FRBM have been shifted for various reasons in the past due to global reasons as well as the domestic reasons. Hence FRBM panel was set up to review the act. The recommendation are explained hereunder which are nonbinding to the government.

  • Emphasis on primary deficit rather than fiscal deficit.
  • Debt/gdp for central govt shall be 38.7% and 20% for state government
  • Fiscal deficit target of 2.5% of the GDP , revenue deficit target of 0.8%
  • Escape clause to deviate from fiscal path
  • Escape clause to be used cautiously in extraordinary situations.
  • Setting up of fiscal council to review the fiscal policy of government, forecast and analysis
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