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Regular-article-logo Thursday, 10 October 2024

Debate on public spending

Set up a body, like GST Council, to decide public expenditure in areas such as health, defence, railways and national highways

A Staff Reporter Calcutta Published 19.07.19, 07:52 PM
Bibek Debroy

Bibek Debroy (The Telegraph picture)

The Union government is keen on a debate on public expenditure at a time centrally sponsored schemes are up for evaluation. Incidentally, the term of these schemes as well as that of the 14 th Finance Commission will end on March 2020.

Bibek Debroy, chairman of the Prime Minister’s Economic Advisory Council, on Friday pitched the idea of having a body equivalent to the GST Council to decide public expenditure in areas such as health, defence, railways and national highways.

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“Just like we have had a phenomenal success with the GST Council as a decision making body between the Union and state governments, we now need an equivalent body to decide on what items should be included in public expenditure,” Debroy said at a seminar organised by the Swadeshi Research Institute and Dr Syama Prasad Mookerjee Research Foundation.

“If health is under the state list (according to the seventh schedule of the Constitution of India), why should the Union government spend on health? If you argue that health is so important that the Union government should continue (to spend), you should agree defence, national highways and railways are important and, therefore, the state government should contribute to those,” he said citing the need for a debate.

Budget relevance

Debroy also said that the relevance of the Union budget as a policy statement could decrease.

“The Union budget is an annual statement of the government’s receipts and expenditure. We have come to equate budget with the announcement of big policy changes, “ he said.

“There are another 364 days. Why do I have to make all the announcements on budget day?” he added.

He said that the eastern states would have to raise their nominal growth rates to 11.5-12 per cent so that India can become a $5-trillion economy by 2024.

He said the nominal growth target of 11.5-12 per cent was based on the premise that the current account deficit to GDP ratio was 2 per cent, the inflation rate 4 per cent, the combined deficit of the states and the Centre 6 per cent and the real rate of growth 8 per cent.

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