N.K. Singh, chairperson of the 15th Finance Commission. (Sonu Mehta/HT)
N.K. Singh, chairperson of the 15th Finance Commission. (Sonu Mehta/HT)

NK Singh calls for a separate entity to enforce fiscal discipline

  • Singh’s remarks echoed recommendations made in a 2017 report by the Fiscal Responsibility and Budget Management (FRBM) review committee
  • Singh said rules for the centre and states should be similar particularly on borrowings

There should be a dedicated institutional mechanism or a separate body to enforce fiscal roadmaps and keep a check on government spending, chairman of the 15th Finance Commission N.K. Singh said on Thursday.

“I’d also like to draw attention to the consolidated fiscal roadmap for the centre and states, where we have entered the era of competitive fiscal profligacy by use of Article 282 by both centre and states," he said.

Article 282 allows the centre as well as state governments to make grants whenever required for a public purpose.

Singh’s remarks echoed recommendations made in a 2017 report by the Fiscal Responsibility and Budget Management (FRBM) review committee, which too was headed by him. The report called for an independent fiscal council but, Singh said, there was no consensus on it.

“How do we bring about a coherent fiscal consolidation roadmap applicable equally to the union and states. One cannot apply dual benchmark," Singh said.

Singh was speaking at the launch of a book, Indian Fiscal Federalism, by former Reserve Bank of India governor Y. V. Reddy and co-authored G.R Reddy, adviser (finance) to the Telangana government.

Singh said rules for the centre and states should be similar particularly on borrowings.

“Rules of the game should be same for both. For state government liabilities, Article 293 (3) provides a constitutional check over borrowings. But there are no such restrictions on the centre," he said.

According to Article 293 (3), states cannot borrow or raise funds beyond the prescribed limit without centre’s consent.

Former Jammu and Kashmir finance minister Haseeb Drabu, who was also present at the book launch, said there is a need for coordination between the finance commission and the Goods and Services Tax (GST) Council.

“The GST Council has no clue of what the finance commission is doing and the finance commission has even less clue of what the GST Council is doing," Drabu said.

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