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WHAT IS MEDIUM-TERM FISCAL POLICY STATEMENT

The Medium-term Fiscal Policy Statement, presented to Parliament under Section 3(2) of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, sets out three-year rolling targets for four specific fiscal indicators in relation to gross domestic product (GDP) at market prices — (i) Revenue Deficit, (ii) Fiscal Deficit, (iii) Tax to GDP ratio and (iv) Total outstanding Debt at the end of the year. The statement includes the underlying assumptions, an assessment of sustainability relating to balance between revenue receipts and revenue expenditure and the use of capital receipts, including market borrowings for generation of productive assets.
 
In Budget 2018, then finance minister Arun Jaitley did away with revenue deficit as a part of the fiscal consolidation road map. Instead, the central government debt and general government debt substituted revenue deficit as a more accurate indicator of fiscal trajectory. 
 
The Interim Budget 2019-20 pegged the fiscal deficit for the year 2019-20 at 3.4 per cent of GDP. According to the Medium Term Fiscal Policy cum Fiscal Policy Strategy Statement, non-debt capital receipts on the capital side are expected to be Rs 102,508 crore in Budgeted Estimates (BE) 2019-20, indicating an increase of Rs 9,353 crore over Revised Estimates (RE) 2018-19.
 
Increase in non-debt capital receipts is mostly on account of disinvestment, which is budgeted at Rs 90,000 crore. Total net borrowings in 2019-20 are projected at Rs 703,999 crore, compared with Rs 634,398 crore in RE 2018-19. This reflects an increase of 11 per cent over the RE.

Read full Medium Term Fiscal Policy Cum Fiscal Policy Strategy Statement

Medium Term Fiscal Policy Cum Fiscal Policy Strategy Statement  2020-21

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