FRBM review committee
- In 2017, the FRBM (Fiscal Responsibility and Budget Management) Act review committee headed by NK Singh recommended the Central government to bring down the fiscal deficit to 3% of the GDP by 2020.
- Fiscal deficit = Total Expenditure – Total Receipts except borrowings
- The committee also allowed an escape clause under the FRBM Act that provides for a deviation from the estimated fiscal deficit on some exception cases such as:
- Overriding considerations of national security, acts of war, and calamities of national proportion and collapse of agriculture severely affecting farm output and incomes
- Far-reaching structural reforms in the economy with unanticipated fiscal implications
- A sharp decline in real output growth of at least 3 percentage points below the average for the previous four quarters.
- The deviation from the stipulated fiscal deficit target must not exceed 0.5 percentage points in a year.
- Escape clauses provide flexibility to governments to overshoot fiscal deficit targets in times of need, enabling them to respond to economic shocks.
- During the Union Budget 2020-21, the Central government pegged the fiscal deficit target as a percentage of the GDP for FY20 and FY21 at 3.8 per cent and 3.5 per cent, respectively, invoking the escape clause in the FRBM Act.
- The committee also suggested that India should adopt debt-to-GDP ratio as a new anchor of fiscal policy along with the fiscal deficit and gradually bring it down to 60 per cent — comprising of 40 per cent for the Centre and 20 per cent for the states.
Why in News?
- The Controller General of Accounts (CGA) reported that the fiscal deficit for 2019-20 at 4.6 per cent of the GDP as against 3.8 per cent projected in the revised estimate. This was the highest level of deficit for the Centre since FY13, when it had stood at 4.8%.
- Reasons for the higher deficit include fall in nominal GDP growth rate to 7.2 per cent and decline in tax and non-tax revenue. As a result, the fiscal deficit was over Rs 9.35-lakh crore against the revised Budget estimate of Rs 7.66-lakh crore.
- A CGA is the Principal Advisor on Accounting matters to the Union Government.
- He is responsible for preparation and submission of the accounts of the Union Government and also responsible for exchequer control and internal audits. CGA derives his mandate from Article 150 of the Constitution.
Duties and responsibilities of CGA
- General principles of Government accounting relating to Union or State Governments and form of accounts, and framing or revision of rules and manuals relating thereto;
- Consolidation of monthly accounts, preparation of review of trends of revenue realization and significant features of expenditure etc and preparation of annual accounts, the annual receipts and disbursements.
- Cadre management of Group ‘A’ (Indian Civil Accounts Service) and Group ‘B’ Officers of the Central Civil Accounts Offices;
- Disbursement of Pension through Public Sector Banks (PSBs) in respect of Central Civil Pensioners, Freedom Fighters, High Court Judges, Ex-M.P.s and Ex-Presidents.