ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Persistence of Fiscal Irresponsibility: Looking Deeper into Provisions of the FRBM Act

While the 2009-10 budget was branded as a lacklustre budget, there seems to be near consensus that it rightly pushed aside the issue of fiscal rules, as growth is the top-most priority at this moment and all else can follow. This paper argues that even if we were to accept this position, the direction and structure of expenditures since the passage of the Fiscal Responsibility and Budget Management Act has been far from "responsible" even when macro caps were being met. The structure of expenditure allocations in the 2009-10 budget appears to be inadequate for a "fiscal stimulus". The time is thus opportune to chalk out a set of "Second Generation Fiscal Rules", which will address the inadequacies that have surfaced during the four-year experience with fiscal rules at the central government level. Prioritising these second generation rules - thus following the gradualist approach - and strengthening enforcement via greater power to the Comptroller and Auditor General, which could play the role of a Fiscal Council, would facilitate greater success of the new rules.

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