First, the anchor of fiscal policy will be a public-debt target rather than a fiscal deficit target—a stock rather than a flow variable. Second, the annual fiscal deficit will continue to be the operating target for budget makers. The fiscal deficit target has been derived from a simple analysis of financial flows. This gives a fiscal deficit target of 2.5% for the Central government and 2.5% for the states. Singh committee has done well to set tough fiscal policy goals for a country that is prone to high inflation as well as macroeconomic instability.

Source: Mint April 16, 2017 17:15 UTC