India needs to move from an annual budget cycle to a medium-term fiscal framework for the economic and political sustainability of fiscal policy. Discuss. – IASPOINT

India needs to move from an annual budget cycle to a medium-term fiscal framework for the economic and political sustainability of fiscal policy. Discuss.

The budget cycle in India corresponds with the annual financial cycle which gives estimates of expenditure & receipts of the government finances.

Along with the budget, the FRBM Act, 2003 also mandates a medium-term fiscal policy statement, a fiscal policy strategy statement, and a macro economic framework statement.

Recent reforms done in the Budgetary cycle:

Issues with Annual Budgetary Cycle:

Need for a medium-term fiscal framework:

Hence, the medium-term fiscal framework can help the government plan and strategize its revenue and expenditure without having to rush through various populist measures for economic and political sustainability.

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