March 7, 2016: Centre’s Fiscal Consolidation Road map – a bumpy ride

March 7, 2016: Centre’s Fiscal Consolidation Road map – a bumpy ride

General Studies: Daily Capsule

Curtain Raiser –News Update (March 7, 2016)

Centre’s Fiscal Consolidation Road map – a bumpy ride:

Fiscal Responsibility & Budget Management Act, 2003 (FRBM Act)
Documents to be tabled annually in the Parliament with regard to Fiscal Policy	·         Medium-term Fiscal Policy Statement ·          Fiscal Policy Strategy Statement ·          Macro-economic Framework Statement
Reset of Fiscal Deficit target in 2008-09	Following global financial crisis
Why review of FRBM Act needed?	Has the law allowed the government the elbow room needed to use all the fiscal tools at its command to ensure that the growth momentum is maintained, without either significantly fuelling inflation or curtailing spending on vital and socio-economically relevant development programmes? If it has not, this may be the time to review the Act, and if necessary, amend it significantly
Arun Jaitley’s Budget proposal to have a committee review the implementation of FRBM Act
Possibility of adopting a target range than a specific number
Benefit of target range	It would give the necessary policy space to deal with dynamic and volatile situations such as the one India faces – global economic and financial market uncertainty, a slowdown in China and tepid private investment demand domestically

Fiscal Deficit Road map: depicting elusive target of 3% of GDP

Source: Review the fiscal consolidation path, March 7, 2016, The Hindu

& Elusive 3% Fiscal Deficit Target, January 15, 2016, Business Standard

 http://www.business-standard.com/article/economy-policy/elusive-3-fiscal-deficit-target-116011500032_1.html