Fiscal consolidation under thirteenth finance commission

Indian economy attained growth trajectory of 9% for the period 2003–08 but the global fiscal crisis culminated in slackening of growth rate to 6% and parameters of fiscal health viz. revenue deficit, fiscal deficit and debt GDP ratio spurted from 0.2, 4.0 and 73.7% in 2007–08 to 5.2, 9.6 and 82.0% in 2009–10. To mitigate the fiscal imbalances Thirteenth Finance Commission formulated Fiscal Adjustment Programme (FAP) for the period 2010–15 that would put the economy back on the high growth trajectory and make the debt deficit ratios revert to the Fiscal Responsibility and Budget Management Act (FRBMA) targets. THFC's recommendations in this regard may be grouped under three categories viz. efficiency promoting budgetary cum organisational reforms, road map for fiscal consolidation and modification in fiscal responsibility legislation to relax FRBM targets. The present paper seeks to analyse fiscal consolidation programmes for correction in fiscal imbalances, revised road map for fiscal consolidation and implications of revised road map.