The economic advisory panel of the 15th Finance Commission on Friday suggested providing a range rather than a number as fiscal deficit targets for both the Centre and states in a report, the commission’s chairman N. K. Singh said on Friday.

Singh said as the pandemic has created a more uncertain world, the commission did not brush aside the suggestion. However, a final decision on setting a range for the fiscal deficit target has yet to be taken.

“Looking at the uncertainties, I felt that, there was merit at looking at a range than a number... Having a range will be in congruity with what you have in monetary policy with +/- 2 per cent (inflation target) and that we could, no doubt, while giving fiscal number say that the central number is this, and it will be more realistic,” Singh told reporters here.

Singh, however, said that providing a range of fiscal deficit would require amendments in the Fiscal Responsibility and Budget Management (FRBM) Act.

“It (providing a range) would mean revisiting the FRBM law which provides for giving a fixed point of fiscal deficit,” Singh said.

In the 2020-21 Union Budget, the government had used the escape clause of 0.5 per cent relaxation provided in the FRBM Act for the last year as well as the current financial year, changing the targets for fiscal deficit to 3.8 per cent and 3.5 per cent of GDP, respectively.

However, with the Centre borrowing a record Rs 12 lakh crore from the market this fiscal, and states’ borrowing ceiling increased to 5 per cent of their GDP from 3 per cent, the general government deficit is expected to be higher than what was projected in budget before the pandemic. Under the monetary policy framework, the RBI has been mandated to contain inflation at 4 per cent, with a band of +/-2 per cent.

Singh said the issue of fiscal consolidation road map, particularly the general government debt-to-GDP target, needs to be revisited and it will be daunting challenge to bring it to the level the FRBM committee had projected.

Singh said the 15th Finance Commission will submit its four volume final report by October-end.