FISCAL POLICY

DEFICITS

 The deficit is the gap between what the government spends and what it gets in income, mainly
from taxes.
 Big deficits are inevitable in a recession. Spending goes up to pay extra unemployment benefits.
Tax income falls. Companies make smaller profits or even fail. Consumers cut back and pay less
VAT. People who lose their jobs pay less income [Link] IS The gap between the receipts
and expenditure
Budget Deficit
 Budgetary deficit is the difference between all receipts and expenses in both revenue and capital
account of the government. Budgetary deficit is the sum of revenue account deficit and capital
account deficit.
 If revenue expenses of the government exceed revenue receipts, it results in revenue account
deficit.
 Similarly, if the capital disbursements of the government exceed capital receipts, it leads to
capital account deficit. Budgetary deficit is usually expressed as a percentage of GDP.
 Budget deficit=Total Expenditure-Total Receipts
 Total Receipts=Revenue Receipt+Capital Receipts
 Total Expenditure=Revenue Expenditure+Capital Expenditure

Revenue Deficit
 A revenue deficit occurs when the net income generated, revenues less expenditures, falls short
of the projected net income. This happens when the actual amount of revenue received and/or
the actual amount of expenditures do not correspond with budgeted revenue and expenditure
figures.
 Revenue Deficit = Revenue Receipts – Revenue Expenditure

Effective Revenue deficit

 Effective Revenue deficit is a new term introduced in the Union Budget 2011-12.
 While revenue deficit is the difference between revenue receipts and revenue expenditure, the
present accounting system includes all grants from the Union Government to the state
governments/Union territories/other bodies as revenue expenditure, even if they are used to
create assets.
 Such assets created by the sub-national governments/bodies are owned by them and not by the
Union Government. Nevertheless they do result in the creation of durable assets.
 Effective Revenue Deficit= Revenue Deficit – Grants from Union Govt to State Govt which are
used in creation of assets by State Government

Budget Deficit or Total Budget Deficit

 A budget deficit is when a country's government spends more than it takes in from taxes or other
forms of revenue. Although individuals, companies and other organizations can run deficits, the
term usually applies to governments.

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 Budget Deficit=Total Expenditure-Total Receipts=(Revenue Expenditure+Capital Expenditure)-
Revenue Receipts+Capital Receipts)
 Budget deficit is always zero as Government borrows whatever shortage of funds to meet its
Total Expenditure

Fiscal Deficit
 Fiscal deficit is defined as excess of total budget expenditure over total budget receipts excluding
borrowings during a fiscal year. In simple words, it is amount of borrowing the government has
to resort to meet its expenses. A large deficit means a large amount of borrowing. Fiscal deficit is
a measure of how much the government needs to borrow from the market to meet its expenditure
when its resources are inadequate.
 Fiscal Deficit=Total Expenditure-Total Receipts excluding Borrowings
 Fiscal Deficit= (Revenue Expenditure+Capital Expenditure)-(Revenue Receipts+ Non Debt
Capital Receipts)
 India was continuously increasing its Fiscal Deficit
 The RBI, however, has been warning the Government regularly of the impending debt trap.
 It was only when the World Bank and International institutions refused to bail our India in 1990-
91 unless it reduced its fiscal deficit, that the Government was forced.
 On the recommendation of Sukhmoy Chakravarty Committee, Govt of India started using the
concept of Fiscal deficit from 1997-98
 The uncontrolled growth of fiscal deficit is due to the sharp rise in non-plan expenditure, mainly
on account of higher interest payments, rise in major subsidies and increase in pensions
payments.

Primary Deficit
 Primary deficit is defined as fiscal deficit of current year minus interest payments on previous
borrowings. In other words whereas fiscal deficit indicates borrowing requirement inclusive of
interest payment, primary deficit indicates borrowing requirement exclusive of interest payment
(i.e., amount of loan).
 Fiscal deficit excluding the interest liabilities for a year is the primary deficit ; a term India
started using since 1997-98
 It is a measure of current year’s fiscal operation after excluding the liability of interest payment
created due to borrowings undertaken in the past
 Primary deficit = Fiscal deficit – Interest payments

Monetized Deficit
 The part of fiscal deficit which is provided by the RBI to the government in a particular year is
monetized [Link] amounts to printing of currency by RBI.
 The Monetised Deficit is the extent to which the RBI helps the central government in its
borrowing programme. In other words, monetised deficit means the increase in the net RBI credit
to the central government, such that the monetary needs of the government could be met easily.
 The monetized deficit results in the increase in the net holdings of treasury bills by the RBI and
also the RBI contribution towards the government’s market borrowings increases.

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 Receipts
 Reciepts means cash inflow to Govt [Link] Receipts Are those receipts which need
not be paid again to the payee by the Government and income from Govt assets [Link]

Capital Receipts
 All receipts other than Revenue Receipts are called as Capital [Link] receipt is of
non-recurring nature. Revenue receipt is of recurring [Link](exceptions are there),
capital receipts are for funding Capital [Link], Capital receipts in India to a
certain extent is used for even spending for Revenue Expenditure

Ways and means advances (WMA)

 These are temporary advances (overdrafts) extended by RBI both to the Central and State Govt.
Objective is to bridge the interval between expenditure and receipts which are repayable in each
case not later than three months from the date of making that advance'.To help them to tide over
temporary mismatches in the cash flow of their receipts and payments.
 There are two types of WMA – normal and special.
 While Normal WMA are clean advances, Special WMA are secured advances provided against
the pledge of government of India–dated securities
 They are not a sources of finance but are meant to provide support, for purely temporary
difficulties that arise on account of mismatch/shortfall in revenue or other receipts for meeting
the govt. liabilities
 The interest rate on WMA is at or around bank rate and overdrawing if any carries 2% higher
interest

Classification of Expenditure
 The Central Government adopted a new classification of public expenditure from 1987-88
budget. Under this new classification, all public expenditure is classified into
(a)Non-Plan expenditure and
(b)Plan expenditure

Plan expenditure
 Plan expenditures are expenditures related to Five Year [Link] Expenditures are estimated
after discussions between each of the ministries concerned and the Planning
[Link] Expenditure is subdivided into Plan Revenue Expenditure and Plan Capital
Expenditure

Non Plan Expenditure

 Non Plan Expenditure is also subdivided into Non Plan Revenue Expenditure and Non Plan
Capital Expenditure A major part of the Non-Plan Expenditure is obligatory in nature, like
interest payments, pensions, statutory transfers to States and Union Territories governments.
 Non-Plan Expenditure constitutes the biggest proportion of the of the government's total
expenditure. The biggest items of Non-Plan Expenditure are interest payments and debt

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 servicing, defence expenditure and subsidies. For defence services, both revenue and capital
expenditure are incurred.

Revenue Expenditure
 Revenue expenditure is for the normal running of Government departments and various services,
interest payments on debt, subsidies,salary payment etc. Broadly the expenditure which does not
result in creation of assets for Government of India is treated as revenue expenditure. All grants
given to State Governments/Union Territories and other parties are also treated as revenue
expenditure even though some of the grants may be used for creation of assets.

Capital Expenditure
 A capital expenditure is the use of funds or assumption of a liability in order to obtain physical
assets that are to be used for productive purposes for at least one year. This type of expenditure is
made in order to expand the productive or competitive posture of a [Link] Expenditure-
Expenditures that create permanent assets and yield periodical [Link]. Building Roads, Ports

Fiscal consolidation
What is fiscal consolidation
 A conscious policy effort is needed by the government to live within its means and thereby bring
down the fiscal deficit and public debt. It includes, among other things, efforts to raise revenues
and bring down wasteful expenditure such as subsidies

Potential benefits of a moderate fiscal deficit

 Government borrowing can benefit economic growth: A budget deficit can have positive
macroeconomic effects in the long run if it is used to finance extra capital spending that leads to
an increase in the stock of national assets
 An increase in borrowing can be a stimulus to demand when other sectors of the economy are
suffering from weak spending

Negatives of High Fiscal Deficit

 It can affect the country’s economic growth adversely.
 A large fiscal deficit implies high government borrowing and high debt servicing, which in turn
could mean a cut back in spending on critical sectors like health, education and infrastructure.
 This reduces growth in human and physical capital, both of which have a long-term impact on
economic growth.
 Large public borrowing can also lead to crowding out of private investment
 Will lead to High inflation
 Currency loses its value.
 Will lead to Exchange rate fluctuations
 Interest rate rises
 There is a decline in the living standard of the people.

Vijay Kelkar Committee Report

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 A 3-member committee headed by the former Finance Secretary and 13th Finance Commission
Chairman, Vijay L. Kelkar was set up to devise the fiscal consolidation roadmap for 2012-13 to
2014-15

Recommendations:
 Tight fiscal consolidation roadmap for the government, with subsidy targets, the future course of
action on administered prices of petroleum products and fiscal deficit targets.
 Enforcing the proposed Food Security Bill in phases.
 Government should raise the prices of food items sold through ration shops, every time the
minimum support price is revised.
 Remove the system of selling the sweetener through the ration shops.

 Instantly raising the diesel prices by Rs 4 a litre, kerosene by Rs 2 a litre and LPG by Rs 50 per
cylinder. These steps, would reduce under-recoveries of oil marketing companies by Rs 20,000
crore. Regular raising of diesel prices until it becomes completely deregulated, and keeping
subsidy at affordable level on LPG and kerosene.
 Increase the MRP of Urea by 10 per cent during the first year.
 The government should save additional Rs 20,000 crore in plan expenditure through proper
prioritization and efficient use of available resources.
 On indirect tax front, there should be standard deduction rate from 12% to 8% in phases, pruning
the list of 6% excise duty to merit goods only etc.
 The government should at least garner Rs 30,000 crore from disinvestment by making offer for
sale model attractive and using exchange traded model for securities held by it in public sector
units.
 The government should set up a group to suggest monetizing government's land resources.
 The Commission held that if the recommendations made by it are taken by the government, then
the Centre may be able to cap its fiscal deficit at 4.6% of GDP in the next financial year and
3.9% in 2014-15.
 Deficit Financing
 It is the process by which how Government funds to take care of the gap between Expenditure
and Revenue.
 Governments consciously have more Expenditure than Revenue to stimulate the Economy based
on Keynes model
 It is a practice in which a government spends more money than it receives as revenue, the
difference being made up by borrowing or minting new funds.
 Deficit Financing involves different methods of Borrowings to take care of Budgetary Deficit

BUDGET
 ‘Budget is derived from an old English word’Bougett’ which means a sack or [Link] bag
from which the British Chancellor of Exchequer extracted his papers to present to the Parliament
the government ‘s financial programme for the ensuing fiscal year.
 It came to mean the papers themselves, especially those contains financial proposals

Principles of Budget
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(1)Budget should be on Annual basis
Means that the legislature should grant money to the executive for one year only
Presently, the financial year in India is from 1st April to 31st March
Administrative Reforms Commission of India(ARC)recommended that the financial year should
be from 1st November to 31st October

(2)Estimates should be on Departmental Basis

Expenditure and revenue estimates of budget should be prepared by the department directly
dealing with [Link] gives a clear picture of the programmes and activities of every department

(3)Budget Should be a Balanced One

Estimated expenditure should not exceed the estimated [Link] the estimated revenue is more
than the estimated expenditure ,it is called a ‘deficit budget’.

(4)Estimates Should be on a Cash Basis

Means that the expenditure and revenue estimates of budget should be prepared on the basis of
what is expected to be actually spent or received during the financial year
Opposite of ‘cash budgeting’is called ‘revenue budgeting’, included in the budget of that
financial year regardless of whether they are actually realised or incurred in that financial
[Link],UK and India have cash budgeting ,while France and some other Continental countries
have revenue budgeting

(5)One Budget for all Financial Transaction

Government should incorporate all its revenues and expenditure in a single [Link] of
‘Single budget’ is ‘plural budget’ under which separate department-wise budgets are
[Link] budget system reveals the overall financial position of the government as a
wholeThe UK and USA have single budget, while France, Switzerland and Germany have plural
budgets

(6)Budgeting Should be Gross and not Net

All transactions of receipts and expenditure of the government should be fully and separately
shown in the [Link] merely the resultant net position

(7)Estimating Should be close

Budgetary estimates should be as exact as [Link] estimating leads to excessive taxation
and underestimating leads to ineffective execution of the budget

(8)Rule of Lapse
Budget should be on annual [Link] the granted money is not spent by the end of the financial
year, then the balance would [Link] year in India and UK is from 1 st April to 31st
[Link] of lapse facilitates effective financial control by the legislature as no reserve funds
can be build up without its [Link] of this rule leads to heavy rush of
expenditure towards the close of the financial year .this is popularly called as ‘March Rush’ in
India
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 (9)Revenue and Capital Portions Should be Separated
Current financial transactions of the government should be distinguished from the transactions of
a capital nature and the two must be shown in two separate parts of the budget called the
‘revenue budget’ and ‘Capital budget’

(10)Forms of Estimates Should Correspond to Form of Accounts

The form of budgetary estimates should correspond to the form of accounts to facilitate effective
financial control

Budget Procedures
Approval by the Cabinet
Finance Ministry places the consolidated budget before the [Link] the approval of the
Cabinet, the budget can be presented to the [Link] is a secret document and should
not be leaked out before it is presented to the Parliament

ENACTMENT OF BUDGET
Enactment means the passage or approval of the budget in Parliament
Stages in Enactment
1. Presentation of budget
2. General discussion
3. Scrutiny by Departmental Standing Committees
4. Voting on demands for grants
5. Passing of Appropriation Bill
6. Passing of Finance Bill

[Link] Of Budget
 Presented in two parts [Link] Budget [Link] [Link] Budget precedes that of the
General [Link] Minister presents in 3 rd week of [Link] Budget presented to
the Lok Sabha by the Finance Minister on the last working day of [Link] Finance
Minister Morarji Desai holds the record of presenting the budget ten times, the most by any.

Merger of Railways and Union Budgets

 In a sweeping recast of India's annual budget process, the government ended the 92-year-old
practice of having a separate rail budget, giving the embattled organisation political space to
work below the radar and implement the massive reforms needed to turn it around.
 The union cabinet also approved finance ministry's proposal to advance the general budget's
presentation by a month from the end of February.
 The union cabinet has decided that from the coming year the rail budget and the general
budget will be amalgamated.

Documents presented during Budget

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 The Budget documents presented to Parliament comprise, besides the Finance Minister’s Budget
Speech, the following:
A. Annual Financial Statement (AFS)
B. Demands for Grants (DG)
C. Appropriation Bill
D. Finance Bill
E. Memorandum Explaining the Provisions in the Finance Bill, 2014
F. Macro-economic framework for the relevant financial year
G. Fiscal Policy Strategy Statement for the financial year
H. Medium Term Fiscal Policy Statement
I. Medium Term Expenditure Framework Statement
J. Expenditure Budget Volume-1
K. Expenditure Budget Volume-2
L. Receipts Budget
M. Budget at a glance
N. Highlights of Budget
O. Status of Implementation of Announcements made in Finance Minister’s Budget
Speech of the previous financial year.

 The documents shown at Serial A, B, C and D are mandated by Art. 112,113, 114(3) and 110(a)
of the Constitution of India respectively, while the documents at Serial F, G, H and I are
presented as per the provisions of the Fiscal Responsibility and Budget Management Act, 2003.
 Other documents are in the nature of explanatory statements supporting the mandated documents
with narrative or other content in a user friendly format suited for quick or contextual references.
 Hindi version of all these documents is also presented to Parliament.
 Earlier ,the economic survey report prepared by the Finance Ministry also used to be presented to
the Lok Sabha along with the budget
 Now, it is presented a few days before the presentation of the budget

General Discussion
 Begins a few days after its [Link] place in both the houses of Parliament and lasts
usually for three or four [Link] motion cannot be moved nor shall the budget be submitted to
the vote of the [Link] Minister shall have a general right of reply at the end of the
discussion

Scrutiny by Departmental Committees

 Houses are adjourned for about three to four weeks.17 departmental standing committees of the
Parliament examine and discuss in detail the demands for grants of the concerned ministries and
prepare reports on them Reports are submitted to both the Houses of Parliament for
consideration

Voting on Demands for Grants

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 In the light of the reports of the departmental standings committees ,the Lok Sabha(not Rajya
Sabha) takes up voting of demands for [Link] are presented ministry wise
Demand becomes a grant after it has been duly [Link] of demands for grants is the
exclusive privilege of the Lok Sabha

Expenditure charged on the Consolidated Fund of India is not submitted to the vote
 Each demand is voted separately by the Lok [Link] also move motions to reduce any
demand for [Link] reduce or reject the demand but cannot increase it

Cut Motions
Policy Cut Motion
 Disapproval of the policy underlying the [Link] of the demand be reduced to Rs 1

Economy Cut Motion

 It represents the economy that can be affected in the proposed [Link] of the
demand be reduced by a specified amount

Token Cut Motion

 Ventilates a specific grievances which is within the sphere of responsibility of the Government
of [Link] of the demand be reduced by Rs 1

Guillotine
 In total,26 days are allotted for the voting of [Link] the last Day the speaker puts all the
remaining demands to vote and disposes them whether they have been discussed by the members
or not

Vote on Account
 Art 116 of Constitution deals with Vote on [Link] 266 of the Constitution mandates
that parliamentary approval is required to draw money from the Consolidated Fund of India
 It takes around 3 months for Parliament to approve budget after discussions and debates(End of
May, Budget gets passed).A special provision is, therefore, made for a 'Vote on Account' by
which the government obtains the vote of Parliament for a sum sufficient to incur expenditure on
various items from 1st April of the new Financial [Link] enables the government to fund its
expenses for a short period of time or until a full Budget is passed.
 Normally, the 'Vote on Account' is taken for two months for a sum equivalent to one sixth of the
estimated expenditure for the entire year under various demands for grants. But it can be for a
slightly longer period of time (3-4 months) as well.
 'Vote on Account' cannot alter direct taxes since they need to be passed through a Finance Bill.

Interim Budget-JFYI

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 An Interim Budget is not the same as a 'Vote on Account'. While a 'Vote on Account' deals only
with the expenditure side of the government's budget, an Interim Budget is a complete set of
accounts, including both expenditure and receipts.
 An Interim Budget gives the complete financial statement, very similar to a full Budget.
 A national interim Budget refers to the budget of a government that is going through a transition
period.
 The interim Budget helps span the transition time between the two governments so that the
government can continue to function till the newly elected Government steps in.

Passing of Finance Bill

 Financial proposals of the Government of India for the next following financial [Link] Act
legalizes the income side of the budget and completes the process of the enactment of the budget

Different types of Grants

(1)Supplementary Grant
If amount authorized by the Parliament through the Appropriation Act for a particular service
for the current financial year is found to be insufficient, then Finance Minister asks for
Supplementary [Link].A bridge which got approval for Rs 10 crore is found insufficient in the
same financial year and requires Rs 2 crore more

(2)Additional Grant
Granted when a need has arisen during the current financial year for additional expenditure upon
some new [Link]. Govt wants to introduce a new laptop scheme in the month of September

(3)Excess Grant
Money has been spent on any service during a financial year in excess of the amount granted for
that service in the budget for that [Link] by the Lok Sabha for Voting,
They must be approved by the Public Accounts Committee Of Parliament before submitting to
Lok [Link]. A Road project which got authorisation of Parliament for Rs 5 crores, has
exceeded its limit to Rs 6 crore and excess amount already spent

(4)Vote Of Credit
Granted for meeting an unexpected demand upon the resources of [Link] account of the
magnitude or the indefinite character of the service the demand cannot be stated with the
[Link]. Tsunami rehabilitation

(5)Exceptional Grant
Granted for a special purpose and forms no part of the current service of any financial year
[Link] expenditure

(6)Token Grant
Granted when funds to meets the proposed expenditure on a new service can be made available
by re –[Link] for the grant of a token sum(Of Re 1)is submitted to the vote of the
Lok Sabha and if assented funds are made [Link]. If Govt wants to build houses for

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 Panchayat President(New scheme) and money is already available under IAY housing which is
unutilised

Funds under Indian Constitution

Art 266:Consolidated Fund Of India
 Fund to which all receipts are credited and all payments are debited
 all revenues received by the Government Of India
 all loans raised by the Government
 All money received by the government in repayment of loans
 All the legally authorized payments on behalf of the Government of India
 Art 266:Public Account of India
 All other money other than credited to CFI
 Includes provident fund deposits ,judicial deposits, departmental deposits etc
 Payments from this account can be made without the Parliamentary appropriation

Art 267:Contingency Fund Of India

 This fund is placed at the disposal of the President.
 Can make advances out of it to meet unforeseen expenditure pending its authorization by the
Parliament
 Fund is held Finance Secretary on behalf of the President and currently it is Rs 500 crore

Types Of Budget
(1)Line –item Budgeting
 Called as traditional budgeting or conventional budgeting or departmental
[Link] on the items(objects)of expenditure without highlighting its purpose and
conceives budget in financial termsThe amount granted by the legislature on a specific item
should be spent on that item only.
 Objectives of this budgeting are to prevent wastage, over spending and misuse of money granted
by the legislature to the [Link] object of line –item budgeting has been the accountability
of funds, that is, ensuring legality and regularity of expenditure.
 This system is also called as ‘incremental budgeting's because the funds are allotted on an
incremental basis after identifying the existing base

(2)Performance Budgeting
 System of performance budgeting originated in the USA
 Performance budgeting emphasizes on the purpose of expenditure rather than the expenditure
[Link] budget in terms of functions ,programmes, projects and activities
 In India ,the adoption of performance budget was recommended first by the Estimates
Committee of Parliament in [Link] Government introduced performance budgeting in
1968 on the recommendation of the Administrative reforms [Link] out the
programmes and accomplishments in financial and physical [Link] facilitates a better
understanding and better review of the budget by the Parliament
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 Zero-Based Budgeting
 It was introduced in the USA by President Jimmy Carter in [Link] ZBB involves a total
reexamination of all schemes afresh instead of following the incremental approach to
[Link], while preparing their budgets, should not take anything for granted and,
therefore should start on a clean slate.
Advantages
 Eliminates or minimize the low priority programmes
 Reduces the tax increase
 Facilitate critical review of schemes in terms of their cost-effectiveness and cost benefits
 ZBB was first introduced in Department of Science and Technology in 1983 and in all the
ministers during 1986-87 fiscal year
 Sunset Legislation
 Formal process of policy review for eliminating the undesired,outdated,redudant and irrelevant
programmes
 “It embodies the concept of self-retiring government programmes by providing for the
termination of statutory authorization of programmes
 Providing for their automatic termination on the prescribed dates unless, affirmatively recreated
by legislature after conducting a detailed review.”

Outcome Budget
 An outcome budget measures the development outcomes of all government [Link]
“Outcome Budget” is an endeavour of the Government to convert the “outlays” into “outcomes”
by planning the expenditure, fixing appropriate targets, quantifying the deliverables in each
scheme and bringing to the knowledge of all, the “outcomes” of the Budget outlays provided for
each scheme/programme.
 For instance, it will tell a citizen if money has been allocated for building a primary health
centre, has indeed come up.
 In India, it has become an integral part of the budgeting process since 2005-06. It is a means to
develop a linkage between the money spent by a government and the results which [Link] will
give a picture what was the actual achievment the previous financial year of each
[Link] 2007–08, the “Outcome Budget” and the “Performance Budget” have been
merged and is presented to the Parliament as a combined document, i.e., the “Outcome
Budget”.Outcome budget is presented by different departments of a Ministry, Performance
budget is presented by Finance [Link] is at Micro Level and Performance is at Macro
[Link] are many outcome budgets in one performance budget

Gender Budgeting
 A Gender budget is a budget that aims at gender equal [Link] budget initiatives are
known as ‘Women’s budgets, 'gender-sensitive budgets', and applied gender budget analysis’.

Gender Budgeting in India

 Gender Budget Statement was first introduced in Budget 2005-06. Every year the
Ministries/Departments are requested through the Annual Budget Circular to highlight the
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 quantum of public expenditure earmarked in budget for women. On the basis of the information
thus furnished by the Ministries/Departments, the Gender Budget Statement is prepared.
 This Statement indicates, in two parts, the budget provisions for schemes that are substantially
meant for the benefit of women. Part A details schemes in which 100% provision is for women,
Part B reflects schemes where the allocations for women constitute at least 30% of the provision.

Fiscal Responsibility and Budget Management (FRBM) Act

 The Fiscal Responsibility and Budget Management Act was enacted by Parliament in 2003 to
bring in fiscal discipline. As per the initial targets, revenue deficit, which is revenue expenditure
minus revenue receipts, have to be reduced to nil in five years beginning 2004-05. Each year, the
government is required to reduce the revenue deficit by 0.5% of the GDP.
 The fiscal deficit is required to be reduced to 3% of the GDP by 2008-09.
 It would mean reduction of fiscal deficit by 0.3 % of GDP every year.
 The implementation of Act was put on hold in year 2007-08 due to global financial crisis and the
need for fiscal stimulus.
 In 2012 FRBM Act was amended and it was decided that the FRBM would target effective
revenue deficit in place of revenue deficit.
 The Rules have mid-year targets for fiscal and revenue deficits.
 In case of a breach of either of the two limits, the FM will be required to explain to Parliament
the reasons for the breach, the corrective steps, as well as the proposals for funding the additional
deficit.

References
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