An autonomous research institute under the Ministry of Finance


Understanding deviations from the fiscal responsibility law in India

Publication date

Aug, 2023


NIPFP Working Paper No. 399


Pratik Datta, Radhika Pandey, Ila Patnaik and Ajay Shah


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.
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