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Set up independent body to rein in fiscal deficit: Viral Acharya
Jul-23-2019

Flagging the threats of high government debt, outgoing RBI Deputy Governor Viral Acharya has pitched for ‘reducing the ease’ with which fiscal deficit goals are shifted through the establishment of an independent fiscal council. He noted that establishing an independent fiscal council, as recommended by the Fourteenth Finance Commission and the Fiscal Responsibility and Budget Management (FRBM) Review Committee of FY17 can help India.

Acharya has stated that the government can improve adherence to the FRBM targets and reduce the ease with which goalposts are shifted to future through such a move. He also pointed out that such a council could monitor the governments’ performance on sticking to the fiscal targets and roadmap by assessing regularly the progress in fiscal consolidation or lack thereof, and providing standardised reports on the displacement of fiscal deficits into off-balance sheet borrowings.

Outgoing RBI Deputy Governor further said that the government has resorted to stretching the FRBM targets with an aim to aid the growth process in the recent years and concerns are also being raised over the off balance sheet borrowings done by the Government or entities controlled by it. He added that the government aims to cut its fiscal deficit target, which is the gap between government expenditure and revenue, to 3.3 percent of GDP in 2019-20 against 3.4% estimated earlier.

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