The federal policy think tank NITI Aayog will work with the States on issues relating to public finance management, its Vice-Chairman Suman Bery said on Thursday.
The 15th Finance Commission and the ones prior have observed that there is a lack of consistency in the transparency of fiscal accounts of States, he said while delivering the inaugural address at the 2nd Annual Conference on Public Finance and Policy, which was organised by the Centre for Public Finance, Madras School of Economics (MSE).
The think thank would look into how the lack of consistency and transparency in the fiscal accounts of States impact their capacity to advance their development agenda, Mr. Bery said.
With the help of the Finance Ministry, we are beginning to take necessary steps to work with the States on issues of public finance management. However, the initiative is still in its infancy and will gain traction once the Parliamentary election is behind us, he said.
“We will approach the issue of a State’s financial management from a positive and analytical point of view and not in a normative sense,” Mr. Bery said. He added that as India marched towards its goal of Viksit Bharat (becoming a developed nation by 2047), it was important to sustain high quality and high levels of economic growth.
“If we think of a fiscal architecture that is supportive of fast growth, the role that fiscal consolidation has to play is underexplored. But it is quite important,” Mr. Bery said. He also said there should be debate on what would be the right fiscal-monetary policy mix which suits India. Climate and environmental challenges would be another issue to be tackled with, Mr. Bery said.
In his special address, C. Rangarajan, former Chairman, Economic Advisory Council to the Prime Minister and former Reserve Bank of India Governor, said fiscal and price stabilities were important to sustain long-term economic growth, while fiscal and monetary policies go hand in hand. “There is no conflict,” he added.
Mr. Rangarajan, who is also Chairman of MSE, said NITI Aayog and other think tanks should urge the Centre to create a roadmap for fiscal consolidation and move in that direction.
