Q. Along with the Budget, the Finance Minister also places other documents before the Parliament which include ‘The Macro Economic Framework Statement’. The aforesaid document is presented because this is mandated by

  • Long standing parliamentary convention
  • Article 112 and Article 110(1) of the Constitution of India
  • Article 113 of the Constitution of India
  • Provisions of the Fiscal Responsibility and Budget Management Act, 2003

Answer: (d) Provisions of the Fiscal Responsibility and Budget Management Act, 2003

Fiscal Responsibility and Budget Management (FRBM) Act, 2003
  • The Fiscal Responsibility and Budget Management (FRBM) Act, 2003, was enacted by the Parliament of India to institutionalize financial discipline, reduce India’s fiscal deficit, improve macroeconomic management and the overall management of the public funds by the government.
  • Under the provisions of the FRBM Act, the government is required to place before the Parliament three statements each financial year, along with the Budget and Appropriation Bills. These are:
    1. The Medium Term Fiscal Policy Statement
    2. The Fiscal Policy Strategy Statement
    3. The Macro Economic Framework Statement
  • The Macro Economic Framework Statement is specifically mentioned under Section 3 of the FRBM Act. This document is crucial as it provides the macroeconomic framework for the relevant financial year, outlining the government’s assessment of the economy’s growth prospects, fiscal policy strategy, and the key fiscal measures and targets.
    • It serves as a backdrop against which the budgetary allocations and fiscal policy decisions are made, ensuring that they are aligned with the broader economic objectives and fiscal discipline goals.
Additional Information:
  • Article 112 of the Constitution of India mandates the Annual Financial Statement that contains estimated receipts and expenditures of the Government of India.
  • Under Article 110 (1) of the Constitution, a Bill is deemed to be a Money Bill if it contains provisions dealing with six specific matters [Article 110 (1)(a) to (1)(f)] broadly related to –
    • imposing, abolishing or regulating a tax; regulating government borrowings; the Consolidated and Contingency Funds of India; and “any matter incidental to any of the matters specified in (the previous six) sub-clauses.
  • Article 113 of the Constitution of India mandates that estimates of expenditure from the Consolidated Fund of India are included in the Annual Financial Statement, which are required to be voted by the Lok Sabha, and submitted in the form of demand for grants.