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The medium-term fiscal framework of the government may take a more comprehensive view factoring in the combined fiscal deficit of the Centre and States.
“The new framework does not mean we will do away with fiscal balancing. It has to be looked at from a more national point of view where we look at fiscal deficit of States and the Centre in a more combined and holistic manner,” Finance Secretary Ratan Watal said on Monday at the Finance Ministry’s post-Budget conference.
A final decision will be taken by an expert committee, he said.
New panelCiting uncertainty and volatility in the global economy, Finance Minister Arun Jaitley in the Union Budget 2016-17 has proposed setting up a committee to review the implementation of the FRBM Act and give its recommendations on the way forward.
Watal, who is also Expenditure Secretary, said the fiscal deficit target of 3.9 per cent in 2015-16 without any expenditure cuts and also stressed the target of 3.5 per cent in 2016-17 will be achieved.
“We are going to adhere to it. We have past credibility in doing so. We have honoured our commitment to ensuring that crowding out in the economy is minimised and domestic saving to the private sector is available for investments,” he said.
Watal stressed the government will sustain capital expenditure at 12 per cent of the GDP in the next fiscal and also rationalise subsidies.
“We are taking a large number of measures to control subsidies and ensure that they remain below 1.6 per cent of the GDP,” he said.
Plan, Non-Plan distinctionOn the Budget announcement of doing away with Plan and Non-Plan expenditure classification from 2017-18, Watal said the Finance Ministry is already in talks with Finance Secretaries of various States.
“Some background work has already been done. We have formed a joint committee on this with States.
CAG’s role“The Controller General of Accounts, which will have to do the bulk of the accounting, is also piloting some studies on it,” he said.
With the switch still a year away, Watal said that the Finance Ministry will also work with the NITI Aayog to ensure that there is some sectoral planning of expenditure.
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