Analyze the structural framework of the Fiscal Responsibility and Budget Management Act, 2003. Which committee recommended a target debt-to-GDP ratio of 40 percent for the central government?

💡 Solution & Explanation

The committee headed by N.K. Singh recommended reforms to the Fiscal Responsibility and Budget Management framework, proposing a combined debt-to-GDP ratio of 60 percent, with 40 percent earmarked for the central government and 20 percent for state governments combined. The panel advocated establishing an independent fiscal council to review budgetary targets and forecast macroeconomic variables. The original Fiscal Responsibility and Budget Management Act aimed to eliminate revenue deficits and instill fiscal discipline across successive fiscal cycles. Amendments over the years have recalibrated these targets to balance growth imperatives with fiscal consolidation.