Yashasvi Sharma SEM IV Fiscal

Himachal Pradesh National Law University
Discipline – FRBM
Topic -N.K Singh Committee Review
Submitted To: - Digvijay Katoch Sir

I would like to express my special thanks of gratitude to my professor Digvijay Katoch Sir who gave me the golden opportunity to do this
wonderful project on the topic the right of the seller to recover the price in the light of “NK Singh Review Committee”, which also helped
me in doing a lot of Research and I came to know about so many new things I am really thankful to them.
Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing this project within the limited time frame.
I would like to express my special thanks of gratitude to my professor Digvijay Katoch Sir who gave me the golden opportunity to do this
wonderful project on the topic the right of the seller to recover the price in the light of “NK Singh Review Committee”, which also helped
me in doing a lot of Research and I came to know about so many new things I am really thankful to them.
Submitted By: - Yashasvi Sharma
BBA LLB (Hons.) (Sem 4th)

Enrollment No.: - 1120202148
1
Acknowledgement
I would like to express my special thanks of gratitude to my professor Digvijay

Katoch Sir who gave me the golden opportunity to do this wonderful project on
the topic the right of the seller to recover the price in the light of “NK Singh
Review Committee”, which also helped me in doing a lot of Research and I came
to know about so many new things I am really thankful to them.
Secondly, I would also like to thank my parents and friends who helped me a lot
in finalizing this project within the limited time frame.
I am over helmed in all humbleness and gratefulness to acknowledge my depth

to all those who have helped me to put these ideas, well above the level of
simplicity and into something concrete.
Thanking you,
Yashasvi Sharma
Enrollment No. 1120202148
B.B.A LLB Sem IV

I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put these ideas, well above the level of simplicity and into something concrete.Secondly, I would also like to
thank my parents and friends who helped me a lot in finalizing this project within the limited time frame.
I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put these ideas, well above the level of simplicity and into something concrete. Secondly, I would also like to
thank my parents and friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put
these ideas, well above the level of simplicity and into something concrete.
Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those
who have helped me to put these ideas, well above the level of simplicity and into something concrete. Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing this project within the limited
time frame.
Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing this project within the limited time
frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put these ideas, well
above the level of simplicity and into something concrete.
Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing this project within the limited time frame.I am
over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put these ideas, well above the
level of simplicity and into something concrete.Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing
this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have
helped me to put these ideas, well above the level of simplicity and into something concrete.Secondly, I would also like to thank my parents
and friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness
to acknowledge my depth to all those who have helped me to put these ideas, well above the level of simplicity and into something concrete.
who have helped me to put these ideas, well above the level of simplicity and into something concrete.
2
I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put these ideas, well above the level of simplicity and into something conc
I would also like to
thank my parents and friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness
and gratefulness to acknowledge my depth to all those who have helped me to put these ideas, well above the level of simplicity and into
something concrete.
NK Singh Review Committee
The FRBM Act was enacted in 2003 and in 2016, the government felt that a lot of time had
elapsed since the act had come into force and there was a need to review it. Since the time the
act was enacted, there were a lot of changes in the Indian economy, which had grown and also
been more conducive to foreign investment than it had been in 2003. The FRBM Review
Committee was formed under the chairmanship of a former Revenue and Expenditure
Secretary Nand Kishore Singh. The other members of the committee included former RBI
Governor Urjit Patel, former Finance Secretary Arvind Subramanian, among others. The
committee submitted its report in 2017.
NK Singh Committee Objectives
The objectives of the N.K.Singh Committee were the following:
1. Review comprehensively the FRMB Act in light of the current changes, historical outcomes,
international economic developments and global best practices.
2. Give a future fiscal framework and roadmap for the country.
3. Later on, the terms of reference for the committee were widened to seek its views on some
recommendations of the 14th Finance Commission and the Expenditure Management
Commission. N.K.Singh Committee Recommendations The committee submitted its report in
January 2020 and it was made public in April that year. Secondly, I would also like to thank my parents and
friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to
acknowledge my depth to all those who have helped me to put these ideas, well above the level of simplicity and into something concrete.
The major recommendations of the N.K.Singh Committee are discussed below.
• It proposed to replace the FRBM Act, 2003 with a Debt Management and Fiscal
Responsibility Bill, 2017.
• Debt to GDP Ratio o The debt to GDP ratio should be 38.7% for the central government,
20% for the state governments together by the FY 2022 - 23.
• Fiscal deficit o By FY 2022 - 23, the fiscal deficit should be 2.5% of GDP.
• The committee recommended achieving the above targets by a ‘glide path’, that is, a steady
progress towards them, by achieving annual targets until 2023.
3
• Fiscal Council o It recommended the setting up of an autonomous Fiscal Council, whose role
would be: To prepare multi-year fiscal forecasts. To improve fiscal data quality. To suggest
changes to the fiscal strategy. To advise the government on fiscal matter.
In March 2016, a committee of distinguished public servants reviewed the framework of the
Fiscal Responsibility and Budget Management (FRBM) Act, 13 years after it was launched.
The purpose was to think about the act and to frame new rules as a result. The FRBM Review
Committee (Chairperson: Mr. N.K. Singh) submitted its report in January 2017. The Report
was made public in April 2017. The Committee proposed a draft Debt Management and Fiscal
Responsibility Bill, 2017 to replace the Fiscal Act, 2003. Secondly, I would also like to thank my parents and
acknowledge my depth to all those who have helped me to put these ideas, well above the level of simplicity and into something concrete .
Key recommendations of the Committee and features of the draft Bill are summarised
below.
Debt to GDP ratio: The Committee suggested using debt as the primary target for fiscal policy.
A debt to GDP ratio of 60% should be targeted with a 40% limit for the centre and 20% limit
for the states. It noted that majority of the countries that have adopted fiscal rules have targeted
a debt to GDP ratio of 60%. The targeted debt to GDP ratio should be achieved by 2023. This
ratio is expected to be around 70% in 2017. To achieve the targeted debt to GDP ratio, it
proposed yearly targets to progressively reduce the fiscal and revenue deficits till 2023 (Table
1).
Note that debt indicates the total outstanding liabilities of the government, while the fiscal
deficit indicates new borrowings made in the year, and the revenue deficit indicates what part
of these new borrowings have been used to cover revenue expenses.
4
Secondly, I would also like to thank my parents and friends who helped me
a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to
all those who have helped me to put these ideas, well above the level of simplicity and into something concrete.
Fiscal Council: The Committee proposed to create an autonomous Fiscal Council with a
Chairperson and two members appointed by the centre. To maintain its independence, it
proposed a non-renewable four-year term for the Chairperson and members. Further, these
people should not be employees in the central or state governments at the time of appointment.
Role of the Council: The role of the Council would include:
(i) preparing multi-year fiscal forecasts,

(ii) recommending changes to the fiscal strategy,
(iii) improving quality of fiscal data,
(iv) advising the government if conditions exist to deviate from the fiscal target,\
(v) advising the government to take corrective action for non-compliance with the Bill.
Deviations: The Committee noted that under the FRBM Act, the government can deviate from
the targets in case of a national calamity, national security or other exceptional circumstances
notified by it. Allowing the government to notify these grounds diluted the 2003 Act.
The Committee suggested that grounds in which the government can deviate from the targets
should be clearly specified, and the government should not be allowed to notify other
circumstances. Further, the government may be allowed to deviate from the specified targets
upon the advice of the Fiscal Council in the following circumstances:
(i) considerations of national security, war, national calamities and collapse of agriculture
affecting output and incomes,
(ii) structural reforms in the economy resulting in fiscal implications, or
(iii) decline in real output growth of at least 3% below the average of the previous four
quarters. These deviations cannot be more than 0.5% of GDP in a year.
Debt trajectory for individual states: The Committee recommended that the 15th Finance
Commission should be asked to recommend the debt trajectory for individual states. This
should be based on their track record of fiscal prudence and health.
5
Borrowings from the RBI: The draft Bill restricts the government from borrowing from the
Reserve Bank of India (RBI) except when:
(i) the centre has to meet a temporary shortfall in receipts,
(ii) RBI subscribes to government securities to finance any deviations from the specified
targets, or
(iii) RBI purchases government securities from the secondary market. Secondly, I would also like to thank my parents and
friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put these ideas, well above
Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing this project
the level of simplicity and into something concret
within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me
to put these ideas, well above the level of simplicity and into something concrete.
Review Committee: The draft Bill requires the centre to establish a committee to review the
functioning of the Bill in 2023-24.
Dissent Note: Mr. Arvind Subramanian submitted a dissent note. He stated that:
(i) allowing for deviations if the output is 3% lower than the four-quarter average, may not
leave flexibility to tackle economic downturns and growth booms, and
(ii) having multiple targets (debt, fiscal deficit and revenue deficit) with precise limits may
make it difficult to achieve them all.
He suggested having a single objective, i.e. placing debt on a declining trajectory, and proposed
alternate limits to reduce debt and deficits till 2023. Further, he argued against specifying a
revenue deficit target The N K Singh Committee report (FRBM–RC 2017) received little
attention, coming as it did on the heels of the demonetisation decree two months earlier,
andwould certainly have commanded more notice in another time.
It has nevertheless come back into public prominence in the recent past, given the discussion
of fiscal stimulus being considered by the current government. There has been a near universal
sense of panic about this impending change in stance in the business papers (see, for example,
Chakravarty 2017) and many point to the N K Singh report as being a guide for this discussion.
6
within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped
meto put these ideas, well above the level of simplicity and into something concrete.
This, despite several news items that point to a serious slowdown in the economy. It is
suggested that, at this juncture, there is indeed a case for fiscal spending that runs counter to
the recommendations of the committee. Perhaps, the most appealing aspect of the report is its
suggestion to repeal the FRBM Act. On this, it is on firm ground.
There is now, by and large an understanding that an ad hoc reduction of the fiscal deficit to 3%
of gross domestic product (GDP) has no reasoned argument behind it and cannot really be
followed when there are exigencies such as those that occurred during the global financial
crisis.
Conceptual Shortcomings
• First, the report suggests long-term policy rules without any reasoned intrinsic notion
of debt sustainability, resulting in an ad hoc framework.
• Second, the recommendations of the report are built on quicksand; they suggest a
target that cannot be easily achieved using the instrument it chooses.
• Third, the analysis of the committee is silent on the fact that the variables that
underlie much of the analysis (the fiscal balance and interest rates) must jointly be
determined by macroeconomic concerns of achieving full employment and price
stability, and that focusing on such variables in the service of debt management alone
will lead to macroeconomic feedback effects that may not be planned.
7
Debt as Target
The main recommendation of the committee is that government debt should be a target, set at
60% of GDP by 2023. It suggests repealing the existing FRBM Act, 2003 and the FRBM Rules,
2004 and enacting a new Debt and Fiscal Responsibility Act in its stead to achieve this. The
operational element here is the fiscal deficit that will be adjusted to reach that level. Several
reasons are given for adopting a debt anchor but are, on reflection, not completely coherent or
convincing. friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me
to put these ideas, well above the level of simplicity and into something concret Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing
helped me to put these ideas, well above the level of simplicity and into something concrete.
eThe committee suggests that in the 21st century “debt is the new anchor” and goes on to say
that ‘debt’, and ‘debt repayments’ are concepts that can be communicated easily to the public,
and are also embedded in the psyche of the ordinary citizen”. It is not clear why this level needs
to be communicated to the public as an anchor at all. There is no macroeconomic reasoning in
which debt levels need to be communicated for stabilisation of any sort. With inflation
targeting there is an anchoring to wage demands. Communication only matters insofar as
beliefs about the target variable directly influence behaviour and while that is true about
inflation, there is no reason to think it is for long-run debt trajectory.
A second reason given is that debt can negatively affect growth. It seems strange to have to
relitigate the debates in the United States (US) and Europe surrounding the relationship
between debt and growth that consumed the early part of the decade at
this late juncture.
Suffice it to say that the view that a debt level that caused growth slowdowns could be identified
econometrically as the infamous Reinhart–Rogoff paper (2010) attempted to do, has been
thoroughly debunked. friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those
who have helped me to put these ideas, well above the level of simplicity and into something concret Secondly, I would also like to thank my parents and friends who helped me a
lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to
all those who have helped me to put friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all
those who have helped me to put these ideas, well above the level of simplicity and into something concret Secondly, I would also like to thank my parents and friends who helped
me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth
to all those who have helped me to put these ideas, well above the level of simplicity and into something concrete.
8
e
these ideas, well above the level of simplicity and into something concrete.
Case Study Regarding FRBM Act based on NK Singh Committee

UTTAR PRADESH
Background
Profile of the State of Uttar Pradesh
In northern India, the state is the fifth-largest geographical area (2.41 lakh square kilometres)
and the largest population.The state’s population increased from 19.98 crores in 2011 to 21.33
crores in 2015. (projected).Approximately 39.80% of the state’s population lived below the
poverty line, compared to the All-India average of 30% in 2011-12. In 2014-15, the Gross State
Domestic Product (GSDP) was Rs. 9,76,297 crores at current prices. The literacy rate in the
state had risen from 56.27 per cent in 2001 to 67.68 per cent in 2010. (2011 Census). Jbcsd
ndbchdsb hdfbh hfbhdb fcfb fsdfcb fhbeh hebefhe hj hbfhweb hfbdc ehvf hefh hfbhd hbfh bfch hfhsd hvhsd bjbed vh dcbs bfvbs cbvhfsd
cvhf dscbvdf bsdvh wedbfv w dfbvdefhwde f db wd dsfv rf f fr edfs df dfewf sfwf swf f sffd ee fwfwerf rf weft f wef e ef wef wewf wr w wfw
we f rf f e srf f r f sfsf Jbcsd ndbchdsb hdfbh hfbhdb fcfb fsdfcb fhbeh hebefhe hj hbfhweb hfbdc ehvf hefh hfbhd hbfh bfch hfhsd hvhsd
bjbed vh dcbs bfvbs cbvhfsd cvhf dscbvdf bsdvh wedbfv w dfbvdefhwde f db wd dsfv rf f fr edfs df dfewf sfwf swf f sffd ee fwfwerf rf weft
f wef e ef wef wewf wr w wfw we f rf f e srf f r f sfsf
Introduction
On June 20, 2014, the State Government presented its budget for 2014-15.
The State Government introduced new schemes with a budget provision of Rs. 20,957 crores,
according to the budget speech. Crowding out may also take place because of social welfare, albeit indirectly. When
governments raise taxes in order to introduce or expand welfare programs, individuals and businesses are left with less discretionary income,
which can reduce charitable contributions. In this respect, public sector expenditures for social welfare can reduce private-sector giving for
social welfare, offsetting the government's spending on those same causes.
milarly, the creation or expansion of public health insurance programs such as Medicaid can prompt those covered by private insurance to
switch to the public option. Left with fewer customers and a smaller risk pool, private health insurance companies may ha form of crowding
out can occur because of government-funded infrastructure development projects, which can discourage private enterprise from taking place
in the same area of the market by making it undesirable or even unprofitable. This often occurs with bridges and other roads, as government-
fu fiends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put these ideas, well
above the level of simplicity and into something concret Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing this pr
The State Government also allocated:
Rs. 41,538 crores for the improvement and expansion of quality education; Rs. 49,108 crores
for infrastructure facilities; It gets estimated that Rs. 25,522 crores will be spent on the welfare
of scheduled castes, scheduled tribal groups and other backward classes; Rs. 7,625 crores will
get spent on agriculture and other related activities; Rs. 14,377 crores for Improvement and
extension of quality in medical, health and family welfare facilities;Twarit Economic
Development Programme will get Rs. 1,000 crores. It provides an audit perspective on the
State Government’s finances during 2014-15 and analyses changes in major fiscal aggregates
9
relative to 2013-14 while keeping overall trends in mind over the previous five years. The
analysis gets based on the Government of Uttar Pradesh’s Finance Accounts and the
information contained therein.
Legal Framework
The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) is an Act of the
Parliament of India enacted in 2003 to institutionalise financial discipline, reduce India’s fiscal
deficit, improve macroeconomic management, and improve the overall management of public
funds by moving towards a balanced budget.
The main goal was to eliminate the country’s revenue deficit (and then build a revenue surplus)
and reduce the fiscal deficit to a manageable 3% of GDP by March 2008.
However, due to the international financial crisis in 2007, the deadlines for implementing the
act’s targets were initially postponed and then suspended in 2009. Given the ongoing recovery
process, the Economic Advisory Council publicly advised the Government of India in 2011 to
reconsider reinstating the provisions of the FRBMA. The State Government of Uttar Pradesh legislated the Fiscal
Responsibility and Budget Management Act, 2004 (FRBM) in February 2004 and laid out a reform agenda with the long-term goal of securing
economic growth and stability.
The State Government of Uttar Pradesh legislated the Fiscal Responsibility and Budget
Management Act, 2004 (FRBM) in February 2004 and laid out a reform agenda with the long-
term goal of securing economic growth and stability.
The State Government was also made responsible under the Act for laying a Medium-Term
Fiscal Restructuring Policy in the House alongside the annual budget, establishing five-year
rolling targets for fiscal indicators, and making rules for carrying out the Act’s provisions.
The Government of Uttar Pradesh notified the Fiscal Responsibility and Budget Management
Rules in October 2006.
Conclusion and Recommendations
The fiscal deficit exceeded (0.33 per cent) the objective established by the Thirteenth Finance
Commission and the FRBM Act of not surpassing 3% of GSDP. However, at the end of 2014-
15, the ratio of Total Outstanding Debt (Rs 3,07,859 crore) to GSDP (Rs 9,76,297 crore) was
10
more significant than the Budget Estimate objective (27.80 per cent) but lower than the
forecasts (41.90 per cent) made by the Thirteenth Finance Commission and the FRBM Act.
The annual increase in the fiscal deficit increased from 8% in 2010-11 to 37% in 2014-15,
indicating an increased fiscal imbalance. However, the declining trend in the fiscal liabilities-
to-revenue-receipts ratio (i.e. 202 in 2010-11 and 159 in 2014-15) indicated improved debt
sustainability in the state.
CASE STUDY
1. Discuss the issues faced by the cooperative sector in Maharashtra, in light of the
budget announcement on not giving government guarantees to the commercial
ventures of the sector?
While many of a project’s stakeholders are eager to get the project’s building started, if you
have faulty schedules and budgets to begin with, your project is headed for an overrun from
day one. Due to the competitive nature of the bidding process, estimates may suffer from
wrongful expectations of the scope of work included in the project. In many cases, some
projects will also be estimated on a one size fits all basis, with chances of exceeding that initial
estimate high. Therefore, it’s vital to your project’s success to do your diligence in the
preconstruction phase and be accurate and realistic about project deadlines and costs from
architects and contractors. Estimating the project accurately can even be started in the RFP
process. This is the opportunity where architects, contractors, and owners can express their
concerns over budget and timelines of the project. If either of the parties appears to be
unrealistic about timing or budget, this should be an immediate red flag that the project is
heading straight for an overrun.
Even though preconstruction and design services may contribute up to as much as 15% of your
budget if this process can successfully identify potential issues before construction actually
begins, that 15% will be nothing compared to the money saved on the process down the line.
Because of the opportunity for cost savings, preconstruction is considered just as important as
the building phase as it truly lays the groundwork for a complex project. A solid planning phase
before ground breaking ensures that you will have a better process of documentation, less
confusion between administrators, and a solid project schedule, all helping to reduce future
expenses.
Administration Errors
11
Even with solid designs and no project changes, your project could still experience overruns if
project administrators aren’t up to speed with your project’s progress. When even small errors
occur between the administration team, the results can be catastrophic. Furthermore, if lines of
communication between administrators are limited, problems that occur on one aspect of a
project may not even become known to other project managers until it is too late. Many
contractors and owners believe that the best solution for bad administration is to simply
increase the size of the administration team. The logic goes, with more people on the job,
administrators will be able to focus specifically on their area of the project. However, this might
not be the best solution in the long run as increasing the number of people in administration
could lead to collaboration failures that will almost certainly involve a cost overrun.
Instead of adding more to your admin team, equip them with the right tools. Project
management software can help play the role of multiple administrators. Unlike traditional
administration, software gives a skeleton crew the ability to view the project from multiple
angles, keeping up with many possible scenarios at once. Concepts can be changed digitally
and compared side by side to previous iterations of the project. When it comes to human errors
in invoicing, accounting, and delivery monitoring that could contribute to overruns, software
can also help to reduce this risk. Administrative errors are rather easy to avoid with a software
system that guarantees the accuracy of all project documents and gives alarms for deliveries.
With the full extra support digitally, administrators will have full visibility and flexibility into
a project to keep operations and logistics running smoothly.
What Is the Crowding Out Effect?

The crowding out effect is an economic theory arguing that rising public sector spending drives
down or even eliminates private sector spending.
Crowding Out Effect

KEY TAKEAWAYS
The crowding out effect suggests rising public sector spending drives down private sector
spending.
There are three main reasons for the crowding out effect to take place: economics, social
welfare, and infrastructure.
Crowding in, on the other hand, suggests government borrowing can actually increase demand.
Understanding the Crowding Out Effect
12
One of the most common forms of crowding out takes place when a large government, such as
that of the U.S., increases its borrowing and sets in motion a chain of events that results in the
curtailing of private sector spending. The sheer scale of this type of borrowing can lead to
substantial rises in the real interest rate, which has the effect of absorbing the economy's
lending capacity and of discouraging businesses from making capital investments.
Companies often fund such projects in part or entirely through financing, and are now
discouraged from doing so because the opportunity cost of borrowing money has risen, making
traditionally profitable projects funded through loans cost-prohibitive.
Large governments increasing borrowing is the most common form of crowding out, as it
forces interest rates higher.
The crowding out effect has been discussed for over a hundred years in various forms. During
much of this time, people thought of capital as being finite and confined to individual countries,
which was largely the case due to lower volumes of international trade compared to the present
day. In that context, increased taxation for public works projects and public spending could be
directly linked to a reduction in the capacity for private spending within a given country, as
less money was available.
The Crowding Out Effect vs. Crowding In

On the other hand, macroeconomic theories such as Chartalism and Post-Keynesian posit that
government borrowing, in a modern economy operating significantly below capacity, can
actually increase demand by generating employment, thereby stimulating private spending as
well. This process is often referred to as "crowding in."
The crowding in theory has gained some currency among economists in recent years after it
was noted that, during the Great Recession of 2007–2009, massive spending on the part of the
federal government on bonds and other securities actually had the effect of reducing interest
rates.1 Jbcsd ndbchdsb hdfbh hfbhdb fcfb fsdfcb fhbeh hebefhe hj hbfhweb hfbdc
ehvf hefh hfbhd hbfh bfch hfhsd hvhsd bjbed vh dcbs bfvbs cbvhfsd cvhf dscbvdf
bsdvh wedbfv w dfbvdefhwde f db wd dsfv rf f fr edfs df dfewf sfwf swf f sffd ee
fwfwerf rf weft f wef e ef wef wewf wr w wfw we f rf f e srf f r f sfsf
Types of Crowding Out Effects
13
Economies
Reductions in capital spending can partially offset benefits brought about through government
borrowing, such as those of economic stimulus, though this is only likely when the economy
is operating at capacity. In this respect, government stimulus is theoretically more effective
when the economy is below capacity. If this is the case, however, an economic downswing
may occur, reducing revenues the government collects through taxes and spurring it to borrow
even more money, which can theoretically lead to a vicious cycle of borrowing and crowding
out.
Social Welfare
Crowding out may also take place because of social welfare, albeit indirectly. When
governments raise taxes in order to introduce or expand welfare programs, individuals and
businesses are left with less discretionary income, which can reduce charitable contributions.
In this respect, public sector expenditures for social welfare can reduce private-sector giving
for social welfare, offsetting the government's spending on those same causes.
Similarly, the creation or expansion of public health insurance programs such as Medicaid can
prompt those covered by private insurance to switch to the public option. Left with fewer
customers and a smaller risk pool, private health insurance companies may have to raise
premiums, leading to further reductions in private coverage.
Infrastructure
Another form of crowding out can occur because of government-funded infrastructure
development projects, which can discourage private enterprise from taking place in the same
area of the market by making it undesirable or even unprofitable. This often occurs with bridges
and other roads, as government-funded development deters companies from building toll roads
or from engaging in other similar projects.
the level of simplicity and into something concret Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing this project
14
2. Discuss the issues faced by the irrigation department in light of the budget
provisions made for the irrigation sector?
The problem of regional imbalance in the state has become a major issue with large off budget
funds raised from the market for irrigation schemes, located mainly in western Maharashtra,
from 1995. This is alleged to have accentuated the problem of regional imbalance.
The governor issued a directive to the state government, which under the provisions of the
Constitution is binding on the state government, to substantially curtail the allocations for
irrigation projects in western Maharashtra and to some extent in Vidarbha. This would imply
that the incomplete irrigation projects will now take several years to complete, resulting in huge
cost over-runs.
This has given rise to considerable agitation which may lead to a serious political crisis.
Significantly, the state finance minister has neither taken note of these implications in the
budget speech nor has he thought it fit to take the people into confidence regarding the
ramifications of the situation arising out of the directive of the governor in the matter.The
finance minister announced that the government will permit private sector investment in
irrigation projects on build, own and operate (BOO) or build, operate and transfer (BOT) basis.
But looking to the dismal cost recovery in irrigation projects, it is unlikely that there will be
anyresponse to this offer except perhaps for supply of water to industry and drinking water
supply schemes for large and metropolitan cities. This is a question which hasmajor budgetary
15
and other implications for the state government and will have to be reckoned with in any
prognosis of the future financial health of the state.
3. Discuss the important features of the fiscal responsibility bill introduced

in the perspective of financial position of the Maharashtra government?
3. friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put these
Secondly, I would also like to thank my parents and friends who helped me a lot in
ideas, well above the level of simplicity and into something concret
finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth
Fiscal Responsibility Bill states that the state government would soon introduce a fiscal
responsibility bill in the legislature. riends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to
Secondly, I would also like to thank my parents and
acknowledge my depth to all those who have helped me to put these ideas, well above the level of simplicity and into something concret
acknowledge my epth to all those who have helped me to put these ideas, well above the level of simplicity and into something concr
The committee’s observations and conclusions are amazingly naive and simplistic considering
the grave fiscal situation facing the centre and the states. The committee is ofthe view that “the
numerical ceilings andthe time frame set for attaining the saidlevels induce excessive rigidity
into thedecision-making, depriving the governments of the flexibility needed to respond to the
exigencies in an appropriate manner...They, therefore, are not in favour of specified levels of
revenue and fiscaldeficits.” Effectively, the committee has knocked out the bottom of the bill
by recommending that the “provisions in theproposed legislation with regard to numerical
ceilings as well as time frame setforreduction in revenue and fiscal deficits, the amount of
guarantees to be given by the central government, and the total li-abilities of the central
government may be deleted and the revenue and fiscal deficits may be kept/maintained at
prudent levels”. friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have
helped me to put these ideas, well above the level of simplicity and into something concret Secondly, I would also like to thank my parents and friends who helped me a lot in
finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those
It is amazing that the committee has failed to grasp the importance of reducing even the
revenue deficit. Issues such as inter-generational equity do not seem to bother the committee
either. All that one can say is that the country gets the government(and law-givers) which it
deserves!With such an approach of political partiesat the national level, it is doubtful if thestate
government’s proposed initiative inthe matter would meet with any success
16
.Among the steps announced by the finance minister to curtail expenditure, a reference may be
made to a few salient points. Though 29,828 posts have been found to be surplusin the
government (and this is just the tip of the iceberg), only vacant posts out of these are to be
abolished. The remaining staff is to be transferred to the surplus cadre cell. If the state
government is serious about reducing the revenue deficit, it ought to announce a voluntary
retirement scheme.
According to recent news reports, the state government has decided not to close down the
offices of several irrigation projects in thestate which have not been allotted any funds and
where the staff is sitting idle without any work for months together. Second, the finance
minister has made token gestures of reducing the salary of ministers by 10 per cent, over and
above the 10 per cent cut already applied earlier.This is in keeping with the hypocrisy since the
heyday of the socialist ideology. Onewonders how ministers are able to managetheir personal
expenditures within the smallsalaries which they receive and yet no onehas seen them complain
on this score. friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped
me to put these ideas, well above the level of simplicity and into something concret Secondly, I would also like to thank my parents and friends who helped me a lot in
finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to nowledge my depth to all those
who have helped me to put these ideas, well above the level of simplicity and into something concret
Their travelling and daily allowance is alsoto be restricted to a maximum of 10 days in a month.
As is the general practice, in most cases, the expenditure on tours of a minister is mostly borne
by the staff of the departments and public sector undertakings in his charge. It has also been
promised by the finance minister that not more than three ministers will attend any function,
apart from the chief minister and the deputy chief minister. Such tokenism detracts from the
merit of the case for curtailing government expenditure and, in fact, brings it into public
ridicule. As was to be expected, there was no assurance to reduce the size of the large council
of ministers. friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me
to put these ideas, well above the level of simplicity and into something concret Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing
e
17
e friends who helped me a lot in finalizing this project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put these ideas, well above
to put these ideas, well above the level of simplicity and into something c
Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing this
the lel of simplicity aBIBLIOGRAPHY into something concret
project within the limited time frame.I am over helmed in all humbleness and gratefulness to acknowledge my depth to all those who have
BIBLIOGRAPHY
1. Dea.gov.in
2. Prsindia.org
3. Prepp.in
4. Indianeconomy.net
5. Ncaer.org
6. Iasparliament.com
8. e
10. e
12. e
14. e
16. e
18

Yashasvi Sharma SEM IV Fiscal

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Yashasvi Sharma SEM IV Fiscal

Uploaded by

Copyright:

Available Formats

Himachal Pradesh National Law University

Topic -N.K Singh Committee Review

Submitted To: - Digvijay Katoch Sir

Submitted By: - Yashasvi Sharma

BBA LLB (Hons.) (Sem 4th)

I would like to express my special thanks of gratitude to my professor Digvijay

I am over helmed in all humbleness and gratefulness to acknowledge my depth

Enrollment No. 1120202148

B.B.A LLB Sem IV

NK Singh Review Committee

NK Singh Committee Objectives

The objectives of the N.K.Singh Committee were the following:

2. Give a future fiscal framework and roadmap for the country.

The major recommendations of the N.K.Singh Committee are discussed below.

Role of the Council: The role of the Council would include:

(i) preparing multi-year fiscal forecasts,

(ii) structural reforms in the economy resulting in fiscal implications, or

(i) the centre has to meet a temporary shortfall in receipts,

Case Study Regarding FRBM Act based on NK Singh Committee

The State Government also allocated:

Conclusion and Recommendations

What Is the Crowding Out Effect?

Crowding Out Effect

The Crowding Out Effect vs. Crowding In

Types of Crowding Out Effects

3. Discuss the important features of the fiscal responsibility bill introduced

You might also like