India`s fiscal responsibility legislation should be reformed: IMF
Washington: Expressing concern at the rising fiscal deficit, the IMF has said that there should be a successor to the Fiscal Responsibility and Budget Management (FRBM) Act to reduce the scope for window dressing in government finances.
India`s fiscal responsibility legislation should be reformed "to reduce opportunities for creative accounting and biased forecasts," said an International Monetary Fund working paper on "India’s Experience with Fiscal Rules".
Although the fiscal deficit of the Central government, as mentioned in the budget documents, was 6.2 percent of gross domestic product (GDP) for 2008-09, in practical terms it worked out to eight percent after taking into account the off-budget expenses, especially the oil bonds.
Suggesting that the government should start fiscal reform as soon as the economy recovers, the IMF paper said the new FRBM framework should "define precisely the accounting framework and definitions for target fiscal indicators".
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