Breaching FRBM limits acceptable in pandemic.

by mehekkaoberoi
  • In light of increased spending commitments due to Covid-19, the Centre and states can breach their fiscal responsibility and budget management (FRBM) limits, but need to have a clear path to come back to fiscal sustainability after the pandemic has been dealt with, Fifteenth Finance Commission Chairman N K Singh said on May 21.
  • Addressing the media via videoconference, Singh said there should be increased focus on rural areas in terms of containment, testing, and treatment, since migrants were heading back to their villages in droves.
  • Singh was speaking after the first meeting of the commission’s panel on fiscal consolidation, and a meeting on the commission’s panel on the health sector.
  • There were also discussions on structural issues in the fiscal situation of the government prior to the outbreak of the pandemic, a relook at the definition of debt and deficits to ensure consistency between stocks and flows, and possibilities for state governments to avail of the full additional borrowing space permitted to them by meeting the conditions therein.
  • In a subsequent meeting on the health sector, there were discussions on the need to increase health budgets and allocations by both the Centre and states. Singh said that we cannot second-guess the path of the pandemic. We do not know when, how, and in what form it is likely to peak and then subside. He added that the idea of a possible national health service cadre was also floated.
  • In the short term, the focus should be on ramping up health infrastructure. There should also be focus on increasing testing, treatment, and containment facilities in rural areas since migrants are returning to the villages.
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