The Chief Economic Advisor Arvind Subramanian has said that the 13- year old Fiscal Responsibility and Budget Management (FRBM) framework has failed to prevent a build-up of dangerous fiscal imbalances and also did not succeed in putting debt in continuous declining trajectory. He added that FRBM in India worked up to certain point but not completely.
Subramanian has pointed out that when India first introduced FRBM around 2002-03, India was a very different country than what it is today. He explained that during 2002, the economic boom had not happened, in fact, things were looking pretty bad then, growth had declined, private investment had declined, and thus it was very different world then. He noted that today it's very different world because India is now much faster growing economy than in 2002 and added that there is a sense in which it is natural to review the FRBM.
In May last year, the FRBM committee was set up to review the working of the FRBM Act over the last 12 years and suggest the way forward 'keeping in view the broad objective of fiscal consolidation and prudence and the changes required in the context of the uncertainty and volatility in the global economy'. The panel, headed by former Revenue Secretary N K Singh, had recently suggested that fiscal deficit should be brought down to 2.5 percent of the GDP by 2022-23 in a phased manner.