N K Singh Committee proposed a draft Debt Management and Fiscal Responsibility Bill, 2017 to replace the Fiscal Responsibility and Budget Management Act, 2003. Feature of Bill
DEBT TO GDP RATIO- Target of 60% till 2023 with 40% for central n 20% for states. It also ensue yearly revenue n fiscal deficit target.
FISCAL COUNCIL-with chairman n two members appointed by central government having 4 year secure tenure. It will prepare multi-year fiscal forecasts, recommending changes to the fiscal strategy, improving quality of fiscal data, advising the government if conditions exist to deviate from the fiscal target, and corrective action for non-compliance with the Bill.
DEVIATION- Counsel can deviate in case of natural calamity, war, during structural reforms n decrease in real output growth.
BORROWING FROM RBI- Can't borrow except to meet a temporary shortfall in receipts, to finance any deviations from the specified targets, RBI purchases government securities from the secondary market.
SHORTCOMING-
1-Debt never affect growth negatively.
2-difficult to achieve all targets simultaneously.
3- India achieved high growth in Mid 2000 in spite of high debt. India never achived 60% target n only 6% is external debt.
4-India with huge young population n massive infrastructure does not need any fiscal target.
5-seeing India's growth rate does not worry India's debt burden.
6- Debt to GDP ration is driven by many factors so government should focus on only that matters where it have control.
CONCLUSION:India’s debt levels are currently sustainable and are unlikely to bloom So there is no need for a sudden surgical strike on the fiscal deficit by adopting a framework overnight without public debate. It would be advisable to put the NK Singh committee report in the public domain for wider debate before a new framework is adopted.
