How was Yeshawant Sinha(opp Prez candidate) as a Finance Minister?

***How was Yeshawant Sinha(opp Prez candidate) as a Finance Minister?***

We have seen economic turmoil in many countries e.g. Greece,Spain and more recently in Sri Lanka. Imagine if India,a very large country would have faultered in that way,what would be the proportion of ramification in global economy. Yeshwant Sinha,the then finance minister in Bajpayee govt and more recently opposition presidential candidate thought about this and introduced Fiscal Responsibility and Budget Management Act(FRBM Act) in 2000 to improve financial health of Govt of India. The bill got assented to act in 2003.

****India was a debt ridden country at that time. Expenditure was higher than revenue. RBI used to buy govt securities to supply money to the govt. India was supposed to suffer due to no fiscal prudence.

****Till now we have learnt that Union Budget document contains i)Annual Financial Statement(as per article 112 of Indian Constitution) & ii)Finance Act(changes related to various taxations i.e. income tax slab revision etc). Apart from these,budget document contains the followings.

iii)Medium Term Fiscal Policy Statement

iv)Macro-economic Framework Statement

v)Fiscal Policy Strategy Statement

FRBM Act made it mandatory for the govt to publish aforementioned three statements.

****Govt has to publish a)Fiscal Deficit b)Revenue Deficit c)Tax Revenue & d)Total Outstanding Liabilities as percentage of GDP compulsorily as per FRBM Act.

**In the Union Budget:2021-22,Govt's aim was to reduce fiscal deficit to 4.5% of GDP by 2025-26(a/c to Medium Term Fiscal Policy Statement).

**Food for Thought: Do you think that a rigid Fiscal Deficit Target(3% of GDP as per 2003 Act) is good for a welfare state like India?

***In the first Modi Govt,Arun Jaietley,then FM set up N.K. Singh Committee. It recommended that Govt should target to achieve a Fiscal Deficit[Revenue-(minus)Expenditure] as follows:

a)3% of GDP in FY 2020

b)2.8% of GDP in FY 2021

c)2.5% of GDP by FY 2023

BUT

Due to Covid-19 expenditure increased, Fiscal Deficit was 9.2% of GDP in FY2021. Target for 2021-22 is 6.8% of GDP. The govt will further bring it down to 4.5% by FY26.

****These numbers are not important. We have learnt about what FRBM Act is & budget document contains three statements and four statistical parameters compulsorily as per FRBM Act. In answer writing,we can say that FD target should be fixed at 3% of GDP as per original FRBM Act,2013.

**We will discuss more on this topic later.

(TO BE CONTINUED.Lots of things to say.)

By,Hemen Sarma

*************************************************