Fiscal council
Also called: Independent fiscal institution · Topic: Government Budget, Fiscal Policy and FRBM · NCERT: Beyond NCERT
Meaning
A fiscal council, also called an independent fiscal institution, is a body that works independently of the government. It checks whether the government's economic and revenue forecasts are realistic and whether it is actually following its fiscal rules. It acts as a neutral referee, which makes deficit and debt targets more credible. India does not have one. It was recommended alongside the 2018 FRBM amendment but was never set up.
Example
The N.K. Singh FRBM Review Committee (report January 2017) proposed a fiscal council. It would have checked, for example, whether a budget's growth and tax projections were believable and whether the Centre was on track for its debt target of 50 ± 1% of GDP by March 2031.
Don't confuse with
- Finance Commission: a constitutional body mainly concerned with sharing taxes between the Centre and states. The 16th FC also suggests a fiscal roadmap (FD 3.5% by 2030-31). It does not monitor compliance year by year.
- CAG: audits accounts after money is spent. It does not assess forecasts.