A committee to review the Fiscal Responsibility and Budget Management Act (FRBM) has suggested steep targets for achieving fiscal rectitude by the Central and state governments. A key recommendation is to move towards using public debt-to-GDP (gross domestic product) as the main variable to map fiscal performance.
The committee has settled at a 60% debt-to-GDP ratio as the anchor, to be achieved by 2022-23. At present, India’s debt-to-GDP ratio is around 68%, which makes India one of the most indebted economies among the emerging ones.
In the existing FRBM approach, the focus has been solely on the fiscal and revenue deficits. The ....
