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New Delhi: Fifteenth finance commission chairman NK Singh pushed for an alternative institutional mechanism to keep a check on the fiscal consolidation road maps of both the centre and states.
Singh also pitched for circumscribing the Article 282 of the Constitution that allows centre and states to make grants for any public purpose that makes it difficult to stick to the fiscal consolidation road map.
“How do we bring about a coherent fiscal consolidation roadmap applicable equally to the union and states.
One cannot apply dual benchmark,” Singh said on Thursday at the launch of a book “Indian Fiscal Federalism” authored by former Reserve Bank of India governor YV Reddy and advisor (finance) to Telangana government, GR Reddy.
The fiscal responsibility and budget management (FRBM) review committee headed by Singh had in 2017, recommended a fundamental shift in fiscal consolidation by targeting overall government debt comprising that of states and centre instead of the current practice of focusing on just fiscal deficit.
“One mechanism which the FRBM Committee suggested was creation of an independent fiscal council on which consensus seems to still have eluded.
But we do need a mechanism for enforcement which will be equally applicable for both centre and states finance commission or any other (body) can work out and lay out a coherent map of fiscal consolidation,” he reiterated.
He called for a Fiscal Council as the country has “entered the era of competitive fiscal profligacy by use of ArtIcle 282 by both Centre and states”.
Emphasising that rules of the game should be same for both, he said Article 293 (3) provides a constitutional check over borrowings and state government liabilities but there are no such restrictions on the Centre.
The government has projected both FY19 and FY29 fiscal deficit at 3.4 per cent of GDP.
Referring to the book, a part of which focuses on cesses and surcharges becoming a disproportionate proportion of the overall divisible revenue, non-tax revenues being kept outside the divisible pool, Singh said these were “worrisome issues”.
