NK Singh Committee Explained | Fiscal Deficit, Public Debt & Escape Clause | UPSC Economy

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In this video, we explain the NK Singh Committee on Fiscal Responsibility, one of the most important topics for UPSC Prelims, Mains, and other competitive exams.

🔹 Key Areas Covered:

Background of the NK Singh Committee (2016–17)

Recommended Public Debt to GDP ratio of 60%

40% for Centre

20% for States

Target year: 2022–23

Why Public Debt is a better indicator than Fiscal Deficit

Difference between Fiscal Deficit, Revenue Deficit, and Public Debt

Importance of including off-budget borrowings

Proposal for a Fiscal Council to improve Centre–State coordination

🔹 Fiscal Targets Recommended:

Fiscal Deficit: 2.5% of GDP by FY 2022–23

Effective Revenue Deficit: 0.8% of GDP

Public Debt as the key anchor instead of fiscal deficit

🔹 Escape Clause Explained:

Allowed deviation of 0.5% of GDP (not 1%)

Applicable during:

War

Natural calamity

Severe economic slowdown

Fiscal deficit could temporarily rise under special conditions

🔹 Buoyancy Clause Explained:

If economic growth is strong for consecutive years:

Fiscal deficit should be reduced faster by 0.5%

Encourages stricter fiscal discipline during high-growth periods

🔹 Exam Focus:

Frequently asked in UPSC Prelims MCQs

Important for FRBM Act amendments

Conceptual clarity for Indian Economy Mains answers

This lecture helps you eliminate options correctly and avoid common UPSC traps related to percentages and clauses.

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