NK Singh, the chairman of the 15th Finance Commission, spoke to CNBC-TV18 about what the government can do to improve the fiscal as well as the tax to gross domestic product (GDP) ratio.
“I have no doubt that the central government will adhere to the credible path of fiscal consolidation which has already been articulated in the interim budget and reiterated several times,” Singh said on the sidelines of the 58th SKOCH Summit.
Singh said they would aim at a fiscal deficit of 3.4 percent and then going around 4 percent.
“The issue is that the central government is well on its way to achieving 40 percent debt to GDP but states will have to be aligned and this will require for the states to look at the new Fiscal Responsibility and Budget Management (FRBM) Act in line with the FRBM Act of 2018,” Singh said.
Talking about the revenues, he said, “There is a need to improve the tax GDP ratio further whereas the buoyancy on direct taxes has been quite positive.”
“We will need to invigorate the buoyancy in the indirect taxes where there is still a lot of settling down and as the goods and services tax (GST) settles down further, I have no doubt that in the period ahead we will see an improved tax buoyancy on the indirect taxes so that the tax to GDP ratio improves substantially and this will ease the fiscal arithmetic of the central government, it will also ease the task of the finance commission because then the revenues will be available for distributing to both the central and to the states will be substantially higher,” added Singh.