Doubt Clearance Thread: UPSC 2021
"When in doubt, observe and ask questions. When certain, observe at length and ask many more questions."
Created this thread as a one stop solution for all members so that all the doubts wherein any conceptual clarification is required can be solved here.
Anyone? I meant to ask are there any penal provisions or something like that in FRBM when states do no adhere to the targets because always we see FD more than 3% only.
Never read anything like that. I believe it is just to improve fiscal discipline .
And anyway who is going to penalize the union govt for exceeding their fiscal deficit????
So, even by this logic, I do not think there are any penal provisions.. Please correct me if I am wrong.
Anyone? I meant to ask are there any penal provisions or something like that in FRBM when states do no adhere to the targets because always we see FD more than 3% only.
Never read anything like that. I believe it is just to improve fiscal discipline .
And anyway who is going to penalize the union govt for exceeding their fiscal deficit????
So, even by this logic, I do not think there are any penal provisions.. Please correct me if I am wrong.
Logic is right. But like in covid times there was an amendment for the states to exceed their fiscal deficit to 5% and borrow more. Why do they have to do it? If states don't have enough money they would anyhow borrow from market. So why these targets and stuff.
THE_MECHANIC,
Never read anything like that. I believe it is just to improve fiscal discipline .
And anyway who is going to penalize the union govt for exceeding their fiscal deficit????
So, even by this logic, I do not think there are any penal provisions.. Please correct me if I am wrong.
I have read somewhere that FRBM limits are statutory and if it cannot be adhered to, amendments to the act need to be made.Maybe judiciary could question the legislature otherwise, if they go beyond the escape clause specified in the act.
curious_kid,THE_MECHANIC
Anyone? I meant to ask are there any penal provisions or something like that in FRBM when states do no adhere to the targets because always we see FD more than 3% only.
Never read anything like that. I believe it is just to improve fiscal discipline .
And anyway who is going to penalize the union govt for exceeding their fiscal deficit????
So, even by this logic, I do not think there are any penal provisions.. Please correct me if I am wrong.
Logic is right. But like in covid times there was an amendment for the states to exceed their fiscal deficit to 5% and borrow more. Why do they have to do it? If states don't have enough money they would anyhow borrow from market. So why these targets and stuff.
Article 293. State's can't borrow without center's permission if they are under debt from center or center has provided guarantee to loans raised by them. Almost all states have raised loans in this way. So, central permission is a must
sstarrr,
Never read anything like that. I believe it is just to improve fiscal discipline .
And anyway who is going to penalize the union govt for exceeding their fiscal deficit????
So, even by this logic, I do not think there are any penal provisions.. Please correct me if I am wrong.
I have read somewhere that FRBM limits are statutory and if it cannot be adhered to, amendments to the act need to be made.Maybe judiciary could question the legislature otherwise, if they go beyond the escape clause specified in the act.
You don't adhere to the law, so you change the law. That's not really a great idea.
And I think they are just targets which are there , nobody adhres to them. Fiscal slippage - kind of terms are used by our FM when they cannot stick to the targets.
THE_MECHANIC,
THE_MECHANIC,@sstarrr Hey, if ES here stands for the Economic Survey, I think it places India at the fourth place after China, Japan, Switzerland. Russia at 5th.
No, its 5th in the recent ES. I have cross checked with my notes rn.
This is what I got from net.
It does show states are regularly failing to comply with the targets and I am not sure what has been done about them. This graph tells post covid times.
Each state have their different FRBM Act, the central one only applies to the Central Govt. They either have some extra deficit clause or bring amendments to the targets if required.
And for Central govt, CAG is empowered to ensure compliance. No idea about states though.
Each state have their different FRBM Act, the central one only applies to the Central Govt. They either have some extra deficit clause or bring amendments to the targets if required.
And for Central govt, CAG is empowered to ensure compliance. No idea about states though.
But the limits for each state is setup by the central govt only, which is same for all the states under the central FRBM act. NK Singh committe report on FRBM targets mentioned the goals for state to be 3% by 2023-25, so It means each state formulate thier laws based on central act and acc to article 293 as well, this should be done.
THE_MECHANIC,
@sstarrr in my opinion you’re unnecessarily getting worked up here. Largely throughout the years since the enactment of the FRBM Act, central and state governments have adhered to the limits. When not, there have been good enough reasons for it. RBI publishes reports annually, you want to see the reasons, go through these reports. Different states in different years go through a myriad of situations. The act is said to be effective because generally the targets are being adhered to, which was the entire point of the Act. You have no targets, you don’t maintain discipline, you have targets, you are bound to do your best to adhere to them. Some times states will exceed the 3% limit, at other times they’ll even generate a surplus.
The government doesn’t just conjure up terms. Situations change, and since that’s the case, the act itself provides escape clauses. ‘Fiscal slippage’ isn’t being used a an excuse here.
I’m using an old graph here but look at this and tell me that ‘no body adheres to them’:
I’m curious though, what term do you expect the FM to use during a pandemic which has impacted the revenue whilst demanding a raise in spending? At this point taking care of the current economy is more important than sticking to targets defined in settled times imo.
@sstarrr in my opinion you’re unnecessarily getting worked up here. Largely throughout the years since the enactment of the FRBM Act, central and state governments have adhered to the limits. When not, there have been good enough reasons for it. RBI publishes reports annually, you want to see the reasons, go through these reports. Different states in different years go through a myriad of situations. The act is said to be effective because generally the targets are being adhered to, which was the entire point of the Act. You have no targets, you don’t maintain discipline, you have targets, you are bound to do your best to adhere to them. Some times states will exceed the 3% limit, at other times they’ll even generate a surplus.
The government doesn’t just conjure up terms. Situations change, and since that’s the case, the act itself provides escape clauses. ‘Fiscal slippage’ isn’t being used a an excuse here.
I’m using an old graph here but look at this and tell me that ‘no body adheres to them’:
I’m curious though, what term do you expect the FM to use during a pandemic which has impacted the revenue whilst demanding a raise in spending? At this point taking care of the current economy is more important than sticking to targets defined in settled times imo.
You got me wrong.
I really understand that the govt has to do this. They are bound to exceed their targets considering the fact only 1.5% of our population pays tax and we being a mixed economy and welfare state govt has to provide a lot of things. So that's natural.
I was just curious of having act and than not sticking. The 3% limit of FD was set for the year 2008. which has since been increased to 2023, which does mean we haven't been able to do that, so what is the purpose of it? And I really wanted to know what is the mechanism for adherence to the act. There has to be something.
P.S - Futile discussion! If comes in paper, answer would be no mechanism to ensure compliance ( or as Caeser said CAG)
sjerngal,
@sstarrr in my opinion you’re unnecessarily getting worked up here. Largely throughout the years since the enactment of the FRBM Act, central and state governments have adhered to the limits. When not, there have been good enough reasons for it. RBI publishes reports annually, you want to see the reasons, go through these reports. Different states in different years go through a myriad of situations. The act is said to be effective because generally the targets are being adhered to, which was the entire point of the Act. You have no targets, you don’t maintain discipline, you have targets, you are bound to do your best to adhere to them. Some times states will exceed the 3% limit, at other times they’ll even generate a surplus.
The government doesn’t just conjure up terms. Situations change, and since that’s the case, the act itself provides escape clauses. ‘Fiscal slippage’ isn’t being used a an excuse here.
I’m using an old graph here but look at this and tell me that ‘no body adheres to them’:
I’m curious though, what term do you expect the FM to use during a pandemic which has impacted the revenue whilst demanding a raise in spending? At this point taking care of the current economy is more important than sticking to targets defined in settled times imo.
for most of the years FD has been above 3% , and even the seemingly good figures of around 4% have been questioned on account of Creative accounting practices like resorting to off budget borrowings, utilising proceeds of compensation cess to artificially show a lower deficit, forcing FCI to borrow from NSSF so that it doesnt reflect on budget figures. And this has been happening for much before covid struck. Positive thing is govt came clean in recent budget by recognising FCI dues.
MikeWozniak,sstarrrsstarrr,
India's forex reserve is fourth largest or fifth largest in the world currently?5th- ES
I highly doubt UPSC would ask such factual questions of such a dynamic figure. RBI ( A govt. org itself) comes out with a weekly update of forex which itself contradicts ES, according to which India overtook Russia to become 4th largest.
sstarrr,If someone has it in their notes, can you please share the top five revenue expenditure items of the Union Govt. And also top three non-tax revenue receipt avenues.
Search Budget at glance on google.
ToyotaQualis,
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