Fiscal policy statements
Also called: Medium-term Fiscal Policy Statement, Fiscal Policy Strategy Statement, Macroeconomic Framework Statement · Topic: Government Budget, Fiscal Policy and FRBM · NCERT: Class 12, Ch 5 "Government Budget and the Economy"
Meaning
The FRBM Act 2003 requires three fiscal policy statements to be laid before Parliament along with the Annual Financial Statement (the budget). They make fiscal policy transparent and open to scrutiny.
- Medium-term Fiscal Policy Statement: sets three-year rolling targets for fiscal indicators. It checks whether revenue spending can be met from revenue receipts and how productively borrowing is used.
- Fiscal Policy Strategy Statement: explains the government's fiscal priorities for the year, and justifies any deviation from targets.
- Macroeconomic Framework Statement: gives the outlook for GDP growth, the fiscal balance and the external balance.
Example
When India paused its FRBM targets for the 2008-09 crisis stimulus, the government had to explain and justify this departure through these statements.
Don't confuse with
- Medium-Term Expenditure Framework statement: added by the 2012 FRBM amendment. It sets multi-year expenditure ceilings. It is not one of the original three statements.