The National Institute of Public Finance and Policy (NIPFP) is a centre for research in public economics and policies. Founded in 1976, the institute undertakes research, policy advocacy and capacity building in areas related to public economics. One of the major mandates of the institute is to assist the Central, State and Local governments in formulating and reforming public policies by providing an analytical base.
Aug, 2023
Authors Pratik Datta, Radhika Pandey, Ila Patnaik and Ajay Shah
Details NIPFP Working Paper No. 399
Abstract
The Parliament enacted the Fiscal Responsibility and Budget Management Act (FRBM Act) in 2003. In most of the following years, union public finance has deviated from the strictures of the law. Was it poor drafting of the statutory escape clause in the FRBM Act, 2003 that led to these deviations? We show that this is not the correct diagnosis. The escape clause that flows from the Constitution of India – the special procedure for money bills – gives the union government the ability to get around shackles placed under Parliamentary legislation. If fiscal rules are sought to be implemented through laws, the legal strategy needs to take this constitutional framework into account.