FRBM panel recommends 3% fiscal deficit target for FY18-FY20

NEW DELHI: The government should target a fiscal deficit of 3 per cent of the GDP in years up to March 31, 2020, the Fiscal Responsibility and Budget Management (FRBM) Committee has recommended.

The report of the committee, headed by N K Singh, was submitted to the government in January this year but was made public only today.

It recommended fiscal deficit to be cut to 2.8 per cent in 2020-21 fiscal and to 2.5 per cent by FY2023.


The panel, however, suggested "escape clause" in case of over-riding consideration of national security, acts of war, calamities of national proportion and collapse of agriculture severely affecting farm output and incomes.

Also, "far-reaching structural reforms in the economy with unanticipated fiscal implications" too can trigger deviation from the targets.

"The deviations from the stipulated fiscal deficit target shall not exceed 0.5 percentage points in a year," it said.

The committee was also for reducing revenue deficit to GDP ratio steadily by 0.25 percentage points each year.

In the four-volume report it recommended revenue deficit should be 2.05 per cent of GDP in current fiscal, declining to 1.8 per cent in the next and 1.55 per cent in 2019-20. This should be brought down to 0.8 per cent in FY2023.