Recasting Fiscal Responsibility Framework: Roadmap To Achieve Viksit Bharat

India's journey to Viksit Bharat needs a fiscal rethink to drive sustainable growth.

In brief

• Aim for a zero-revenue deficit for both the GoI and states, implying elimination of government dissavings and boost the nominal saving rate to 33.5% of GDP.
• Combine a 33.5% nominal savings rate with 2% net foreign capital inflows to achieve total investible resources in nominal terms at 35.5% translating into real terms at 38.5% of GDP.
• Achieve a 7% real GDP growth with real investible resources at 38.5% of GDP combined with an incremental capital-output ratio (ICOR) of 5.5.

As India progresses towards a Viksit (developed economy) status, there is a need to recast the current fiscal responsibility framework (FRF), which evolved over a period from 2002 to 2010. The major milestones in the evolution of this framework occurred with the enactment of the Fiscal Responsibility and Budget Management Act (FRBMA) by Government of India (GoI) in 2003 and the