The term of reference, which Singh was referring, to says: “The Commission shall review the current status of the finance, deficit, debt levels, cash balances, and fiscal discipline efforts of the Union and states, and recommend a fiscal consolidation roadmap for sound fiscal management, taking into account the responsibility of the central government and state governments to adhere to appropriate levels of general and consolidated government debt and deficit levels, while fostering higher inclusive growth in the country, guided by the principles of equity, efficiency and transparency.”
“We do not need a new legal framework because the existing FRBM Act is quite a robust legal framework, except for the fact that some states need to align their own FRBM Acts with the central law,” Singh said.
This statement comes just days after the Commission’s first report for 2020-21 was made public. The report had recommended that the country needs an overarching legal fiscal framework that would mirror the revised FRBM Act, define the roles and responsibilities of key stakeholders, as well as the budgeting, accounting, internal control and audit standards to be followed at all levels of government.
“I have been thinking about whether such a legal framework would be useful or practical. But certainly, we need to have a fiscal roadmap, which covers the Centre
and states, both on the fiscal deficit and debt on off-budget borrowing of contingent liabilities,” Singh said.
The Finance Commission is expected to submit its second report for 2021-22 to 2025-26 in October. Singh said that because of the paucity of time, he may not be able to seek inputs from members of the erstwhile FRBM Committee, including former Chief Economic Advisor Arvind Subramanian and former Reserve Bank of India (RBI) Governor Urjit Patel.
“We would like to have representatives from the finance ministry, the RBI, the Comptroller and Auditor General, and states, as well as subject experts in the committee,” he said.
Singh was speaking to reporters after the meeting of the 15th FC and its Advisory Council. Apart from the members of the Commission, the meeting was attended by several prominent economists, such as Chief Economic Advisor Krishnamurthy Subramanian and bureaucrats like Economic Affairs Secretary Atanu Chakraborty, and Expenditure Secretary TV Somanathan.