The FRBM Review Committee, in 2017, suggested adoption of a rule based fiscal policy by limiting government debt, fiscal deficit and revenue deficits to defined targets with an escape clause. It recommended Govt debt/GDP ratio be brought down to 60 per cent by 2023 (40 per cent for the Centre and 20 per cent for States). The Committee advised governments not to borrow for current expenditure; advocated fiscal deficit as the operating target to bring down public debt.

The 15th Finance Commission, after reviewing the finances of the Union and the States during Covid and thereafter, set targets for fiscal consolidation with fiscal deficit and fiscal liabilities of the States to reach 2.8 per cent and 30.9 per cent of GSDP by 2024-25 with a revenue surplus. The outcome of debt/GDP ratio on ec

See Full Page