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What is Medium-term expenditure framework statement
The medium-term expenditure framework (MTEF) statement sets a three-year rolling target for expenditure indicators, along with specifications of underpinning assumptions and risks. This statement is presented in Parliament under Section 3 of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003.
The statement provides an estimate of expenditure for various sectors, including education, health, rural development, energy, subsidies and pension, and so on. Data such as expenditure commitments spread across the various central ministries on salaries and pensions, major programmes, grants-in-aid for creation of capital assets, defence expenditure, interest payment and major subsidies, etc, besides other commitments of the government are considered while formulating this statement.
Expenditure commitments for revenue and capital expenditure are shown separately. Also depicted as part of revenue expenditure are "grants-in-aid for creation of capital assets" and its projection.
The objective of MTEF is to facilitate a closer integration between FRBM statements and the Union Budget. This statement is presented in the session after the one in which the Budget is presented — usually, that is the monsoon session.
The first Medium Term Expenditure Framework was laid in the monsoon Session of Parliament in August 2013.
MTEF essentially contains the following:
- The expenditure commitment of the government on major policy changes involving new services, new instruments of service, new schemes and programmes
- Explicit contingent liabilities in the form of stipulated annuity payments stated over a multi-year timeframe
- A detailed break-up of grants for creating capital assets
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