MUMBAI: N.K. Singh, chairman of the 15th Finance Commission, said having a fiscal deficit range, instead of a single target, may be the need of the hour.
"The Union government recently allowed additional 2% borrowing for states in July this year based on universalisation of One Nation-One Ration Card, ease of doing business, power distribution and urban local body revenues," Singh said.
"Performance and outcome-based flexibility in two states for undertaking market borrowing adds flexibility." The central government has allowed nine states to borrow an additional 235.23 bln rupees in the current financial year ending March for implementing One Nation One Ration Card scheme in their states.
As part of the stimulus package to mitigate the economic fallout of the COVID-19 pandemic, the Centre had in May increased the market borrowing limit of states to 5.0% of Gross State Domestic Product from 3.0% for 2020-21, subject to the states undertaking certain reforms.
"There is a need for continuity on aligning the fiscal consolidation roadmap of the Centre and the states in a more harmonious symmetry,” he said.