18.22 ndian onom
and to put political responsibility on the were accepted by the Government in the Union
government. Budget 2018-19. These are—keeping Central
(ii) The RBI will not be the primary subscriber Government’s Debt-GDP ratio at 40 per cent and
to government securities in the future— a fiscal glide path (of 0.5 per cent flexibility). These
committed way back in 1997. changes (introduced through amending the Act)
3. The fiscal responsibility on the governments: are expected to give enough fiscal space to the
(i) The Fiscal Responsibility and Budget Government to consolidate the fiscal situation of
Management (FRBM) Act was passed the economy.
in 2003 (voted by all political parties)
which puts constitutional obligation Zero-Base BudgetIng
on the government to commit so many The idea of zero-base budgeting (ZBB) first came
things as fiscal responsibility comes to the privately owned organisation of the USA by
in the public finance—fixing annual the 1960s. This basically belonged to a long list of
targets to cut revenue and fiscal deficits; guidelines for managerial excellence and success,
the government not to borrow from the others being Management by Objectives (MBO),
RBI except by the WMA; government Matrix Management, Portfolio Management,
to bring in greater transparency in fiscal etc to name a few.51 It was the US financial
operations; along with the Budget the expert Peter Phyrr who first proposed this idea
government to lay statements regarding for government budgeting and Jimmy Carter,
fiscal policy strategy in the House and Govornor of Georgia, USA was the first elected52
Quarterly Review of trends of receipts
executive to introduce ZBB to the public sector.
and expenditures of the government.
When he presented the US Budget in 1979 as the
(ii) A mechanism (to include state US President it was the first use of the ZBB for any
governments under the umbrella of nation state. Since then many governments of the
fiscal responsibility) was advised (now world have gone for such budgeting.
implemented, too) by the 12th Finance
Zero-base budgeting is the allocation of
Commission which allows the state
resources to agencies based on periodic re-
governments to go for market borrowing
evaluation by those agencies of the need for all
(without central permission) for their
the programmes for which they are responsible,
need of plan development provided they
justifying the continuance or termination of each
pass their fiscal responsibility acts (FRAs)
programme in the agency budget proposal—in
and commit to the fiscal responsibility
other words, an agency reassesses what it is doing
regarding cutting their revenue and fiscal
deficits. By March 2016, all states and 51. George R. Terry and stephen G. Franklin, Principles
UTs had implemented their FRAs. of Management (New Delhi: AITBs, 2002), pp. 9–10.
52. see Peter A. Phyrr, ‘The zero Base Approach to
Government’s follow-up to the FRBM
overnment udgeting , u lic d inistration
Act has shown mixed results. Introspecting the evie , ( an Fe , , 7; and Thomas P. Lauth,
situation, the Government did set up a review ero ase udgeting in eorgia State overnment
committee on the Act in 2016-17 with a wish to yth and eality , u lic d inistration evie , 38
Sept. ct., pp. cited in icholar Henry,
have ‘range’ as the target of fiscal deficit in place Public Administration and Public Affairs (New Delhi:
of ‘number’. Some key advices of the Committee rentice Hall, , p. .