NEW DELHI: the 15th Finance Commission Chairman, N K Singh, said recently that The government should concentrate on the fastest possible revival of the economy rather than focusing on fiscal consolidation and increased public debt
He said,both the central and state governments finance are under acute pressure of giving much lower growth number and revenue receipts.
Speaking to reporters after the meeting of the commission with the economic advisory council, Singh said this year fiscal numbers look to be way out of what they have been considered, and the finance ministry itself has increased their borrowings from the Reserve Bank and the state governments are also going to borrow more.
He further said, “This is not the time to talk of fiscal consolidation. This is the time in which the world believes, I think that what needs to be protected is the expenditure over fiscal deficit and this is exactly what the central government has done.
“They have addressed the issue of where the money and finances should go but going beyond the current and next year, central government is conscious, everyone is conscious… how to return to the path and what kind of a return trajectory both on fiscal deficit and debt can be considered reasonable.
One of the terms of reference of the 15th Finance Commission is to suggest a consolidated road map in terms of the deficit, finances, debt of the general government for 2021-22 to 2025-26.
This year we must not concentrate on the fiscal or the debt. We must concentrate on the fastest possible revival of the economy. We must concentrate on ensuring that in terms of the painful transition, the pain is minimised in multiple interventions, and multiple interventions have taken place,” Singh said.
Rating agencies have projected India’s fiscal deficit (combined Centre and states) to be around 11-12 per cent of GDP in current fiscal, while government debt to touch 84 per cent of ..
“Each one of these are brought with their own methodological challenges and on probability of assumptions. We have received these views and we will have to debate them internally in the commission,” he said.
Singh said growth momentum is likely to increase in the medium term and there would be sharp recovery next year.
International agencies have projected growth to shrink by around 4-5 per cent this fiscal but recovery to 8-9 per cent next fiscal, mainly on account of low base.