In bid to end data debate, finance panel to reconcile numbers with RBI, CAG
NK Singh meets bankers, economists to thrash out plans
The 15th Finance Commission will reconcile data from several sources for its report, as a matter of prudence. This was stated by NK Singh, Chairman of the Commission, after meetings with representatives of the RBI and banks, apart from eminent economists, during a two-day visit to Mumbai.
Singh’s observation comes in the wake of recurring debate on India’s key economic data-sets. “The RBI, CAG and we will reconcile data so as to consider what is reliable. It would be within the bounds of acceptable and appropriate prudence to be able to do so,” he told a press conference here on Thursday.
The Commission had held a meeting with economists and bankers to understand the issues facing the sector, and it had sharpened its understanding of key measures to maintain macroeconomic stability, he added.
“The States’ overall debt picture is an important area of concern, with different States being in different stages of compliance and non-compliance with the desired debt trajectory. This is an area where we had very useful discussions,” he said.
Credit rating by States
Yesterday, the RBI had expressed its concern to the Commission over fiscal slippages by States caused by schemes such as farm loan waivers.
“What are the mechanisms by which the market makes its voice felt in terms of cost of borrowing, and differentiates between better-governed States and not-so-well-governed States, especially given that States are increasingly resorting to market borrowings? This was explored through possible mechanisms such as encouraging credit ratings by States,” Singh further said. “We also explored, particularly in the light of the FRBM (Fiscal Responsibility and Budget Management) Report, what mechanisms can be strengthened to enable the Central government to conform to its targets.The last five years have witnessed a government quite committed to adhering to the fiscal deficit targets,” he added.
The Commission also discussed the future of Centrally sponsored schemes, on which, according to Singh, the government spends over ₹3.5 lakh crore a year.
There is a need for the recapitalisation of Prompt Corrective Action (PCA) on public sector banks, said Singh. Action will be taken following a memorandum from the Centre, he added.