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Kerala PSC Indian Economy Book Study Materials Page 490Book's First Page
18.18 ndian onom (i) GoI to take measures to reduce fiscal and their FRAs (fiscal responsibility acts) in the revenue deficit so as to eliminate revenue forthcoming years. Both of the governments have deficit by 31 March, 2008 (which was shown better fiscal disciplines since then43. To the revised by the UPA Government to extent ‘exact’ follow-up to the FRBMA-linked March 31, 2009) and thereafter build up targets are concerned, the performance has been adequate revenue surplus. mixed. The targets were exceeded many times (ii) Rules to be made under the Act to specify due to fiscal escalations (either due to natural annual targets for the reduction of fiscal calamities or on exceptional ground), while many deficit (FD) and revenue deficit (RD) times they were better than the mandated targets, contingent liabilities and total liabilities too. But this act brought the element of higher (RD to be cut by 0.5 per cent per annum fiscal discipline among the governments, there is and FD by 0.3 per cent per annum). no doubt in it44. (iii) FD and RD may exceed the targets only In the past few years a view has emerged as on the grounds such as national security, per which binding the government expenditures calamity or on exceptional grounds. to a fixed number may be counterproductive (iv) GoI not to borrow from RBI except by to the economy at large. Due to a hard and fast Ways and Means Advances (WMAs). discipline regarding fiscal targets, some highly (v) RBI not to subscribe to the primary issue desirable expenditures by the government may of the GoI securities from 2006–07 (it get blocked, for example—expenditures on means that these government bonds/ infrastructure, welfare, etc. This is why we find a papers will become market—based changed stance of the Government of India in the instrument to raise long-term funds by Union Budget 2016–17 regarding the follow-up the government). to the FRBMA. Terming it a new school of thought the Budget suggests two important changes in its (vi) Steps to be taken to ensure greater fiscal road map: transparency in fiscal operations. (i) It may be better to have a fiscal deficit range (vii) Along with the Budget and Demands for as the target in place of a fixed number as Grants, the GoI to lay the following three target. This would give necessary policy statements before the Parliament in each space to the government to deal with financial year: dynamic situations. (a) Fiscal Policy Strategy Statement (ii) A need is felt to align fiscal expansion or (FPSS); contraction with credit contraction or (b) Medium Term Fiscal Policy expansion respectively, in the economy. Statement (MTFPS); and In the opinion of the Budget, the government (c) Macroeconomic Framework should remain committed to fiscal prudence Statement (MFS). and consolidation but a time has come when (viii) The Finance Minister to make quarterly the working of the FRBMA needs a review— review of trends in receipts and especially in the context of the uncertainty and expenditure in relation to the Budget and place the review before the Parliament. 43. Economic Survey 2013–14; 2014–15 and 2015–16. 44. The acceptance to the recommendations of the 13th Recent changes: After the enactment of the and 14th Finance Commissions by the Government FRMBA, the states also followed the suit passing of India in this regard have been highly effective.