Why fiscal rules should be revisited

According to the revised FRBM rules, as amended by the Finance Act, 2018, the central government debt stock should not exceed 40 per cent of GDP by the end of financial year 2024-25

The Union government has once again deviated from the stated fiscal consolidation road map. It will now aim to contain the fiscal deficit at 3.8 per cent of gross domestic product (GDP), compared with the current year’s budget estimate of 3.3 per cent. The government aims to bring down the fiscal deficit to 3.5 per cent of GDP in the next financial year. Presenting the Union Budget for 2020-21, Finance Minister Nirmala Sitharaman used the escape clause under the Fiscal Responsibility and Budget Management (FRBM) Act on account of structural reforms in the economy, with unanticipated fiscal implications for both