Government’s fiscal deficit target of 3 per cent by next financial year could be changed to a “range” post a committee’s recommendations on the country’s fiscal roadmap, says a Nomura report.
According to the Japanese financial services major, the recommendations by a five-member panel could be implemented in the next budget.
“Currently, the government has a fiscal deficit target at 3 per cent of GDP in 2017-18, but this could be changed to a ‘range’ post the committee’s recommendations, in our view,” Nomura said in a research note.
The committee will submit its report to the government by October this year which implies that its recommendations could be implemented in the next budget.
The government on May 17 formed a five-member committee under former revenue secretary N K Singh to review the working of the 12-year old FRBM Act and examine the feasibility of a fiscal deficit range instead of a fixed target.
The committee will review the working of the Fiscal Responsibility and Budget Management (FRBM) Act over the last 12 years and suggest the way forward “keeping in view the broad objective of fiscal consolidation and prudence and the changes required in the context of the uncertainty and volatility in the global economy”.
The FRBM review committee will seek to settle the debate whether government can opt for higher fiscal deficit to boost economic growth.
In the 2016-17 budget, the government announced it was setting up a panel to change the medium-term fiscal deficit target from the current absolute number to a range, to “give necessary policy space to the government to deal with dynamic situations.”