Fiscal Policy and Reforms in India

Sol –

FRBM Review panel (2016) recommendations – 

1. Debt to GDP Ratio(ऋण-जीडीपी अनुपात) = 60%
   1. 40% for center
   2. 20% for states
2. The fiscal deficit needed to be brought down to 2.5% of GDP by 2023
3. The revenue deficit needs to be lowered each year by 0.5% and hence achieve 0.8% of GDP by 2023
4. Escape clause –
   1. In case of recession or any other extreme event (War, National security, major economic reform etc), there should be an escape clause. Hence targets should be flexible
   2. However, deviation should not be more than 0.5% of the target 
5. A fiscal council for the overall monitoring of the fiscal conditions
6. Congruence of fiscal and monetary policy for overall macroeconomic stability