A finance ministry official who spoke on condition of anonymity said the new framework for debt and fiscal deficit will feed into the annual budget for 2018-19. A Debt and Fiscal Responsibility Act proposed by the Singh panel calls for making total debt instead of the fiscal deficit the metric for fiscal prudence. The panel favoured curtailing the central government’s debt at 38.7% of gross domestic product (GDP) by 2022-23, down from 49.4% in 2016-17. This is a departure from the current Fiscal Responsibility and Budget Management (FRBM) Act that focuses mostly on limiting the fiscal deficit. Srivastava pointed out that the central government’s debt could be lowered to 40% of GDP even while running a fiscal deficit of 3% under the current law.

Source: Mint July 13, 2017 19:07 UTC