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NCAER Proposes Independent Fiscal Councils for States

13 February 20251 min read
ECONOMYNCAER ProposesIndependentFiscal Councils forStates13 February 2025safalsetu.com

Why in the news

A research paper from NCAER advised states to build independent fiscal councils that strengthen their institutional capacity for managing public money.

Key facts

  • Members: academics, market participants and other experts.
  • Functions: vet state revenue and expenditure projections, give independent analysis of fiscal sustainability, and examine contingent liabilities to reveal hidden risks.
  • EU model: the European Commission plays a quasi-council role at Union level, and each member country has its own council to critique budget forecasts.
  • Forensic review: the paper wants close study of revenue shortfalls and overspending in the weakest-performing states.

Background

  • A Central Fiscal Council was earlier recommended by the 13th and 14th Finance Commissions and the N.K. Singh Committee on FRBM.
  • The Centre turned it down, worried about the finance ministry’s powers.

Exam angle

  • Think-tank: NCAER; aim: fiscal discipline at state level.

Test yourself

1. Which organisation proposed that Indian states set up independent fiscal councils?

The National Council of Applied Economic Research suggested state-level fiscal councils in its paper.

2. Which committee on FRBM also called for a central fiscal council, a proposal the Centre rejected?

The N.K. Singh Committee on FRBM recommended such an institution.

3. Which model did NCAER cite as an example for state fiscal councils?

In the EU, each member state has a fiscal council that critiques budget forecasts.

This topic is part of Daily Current Affairs 13 February 2025 (9 topics).

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