Fiscal Consolidation

Fiscal consolidation means improving government finances and maintaining the same.Fiscal consolidation is critical as it enables government to spend more on infrastructure and social sectors.Tax reforms, disinvestment, better targeting of subsidies and so on are the hallmarks of fiscal consolidation.

Fiscal Responsibility and Budget Management Act (FRBMA)

• Fiscal Responsibility and Budget Management Act (FRBMA) provides an institutional framework and binds the government to adopt prudent fiscal policies.
• There is a need to involve states to effect overall fiscal consolidation and strengthen the growth momentum with macro-economic stability.
• VAT is an important federal effort toward fiscal reforms and consolidation. An important part of fiscal consolidation is to privatize loss-making state-run companies or to close them.
• Fiscal consolidation is important for benign inflation and interest rates that will bring in more private investment.
• Without fiscal consolidation, it is not possible to step up public investment, especially in areas such as agriculture.