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MONEY AND
BANKING
Unit 1
Money
Learning Objectives
At the end of this unit, you will be able to :
SUMMARY
Money is an important and indispensable element of modern civilization. In ordinary
practice, what we use to pay for things is called money.
In the traditional sense, money serves as medium of exchange, measure of value, store of
value and standard of deferred payment.
In the modern economics, it serves dynamic functions like encouragement to division of
labour, proper way of transferring the savings into investment and investing in productive
channels.
The money stock in India is divided into narrow money and broad money. Narrow money
excludes time deposits of the public with the banking system while broad money includes
it.
MONEY AND
BANKING
Unit 2
Commercial Banks
Learning Objectives
At the end of this unit, you will be able to :
2.0 INTRODUCTION
A modern industrial society cannot be run by self-financing of entrepreneurs. Some institutional
assistance is necessary to mobilise the savings of the community and to make them available to
the entrepreneurs. The people, a large majority of who save in small odd lots, also want an
institution which can ensure safety of their funds together with liquidity. Banks assure this
with a further facility - that the funds can be drawn back in case of need.
From a broader social angle, banks act as a bridge between the users of capital and those who
save but cannot use the funds themselves. The idle resources of the community are thus activated
and brought to productive use.
Besides, the banking system has capacity to add to the total supply of money by means of
credit creation. The bank is a dealer in credit - its own and other peoples. It is because of the
ability to manipulate credit that banks are used extensively as a tool of monetary policy.
human clerk or bank teller. Banks issue ATM card to its customers which, generally, is a
plastic card with magnetic strip. Using ATM and ATM card, customers can access their
bank accounts in order to make cash withdrawals and check their account balances.
Nowadays, transactions which are bulk and repetitive in nature are routed through
electronic clearing service (ECS). India has two main electronic funds settlement systems
for one to one transactions: the Real Time Gross Settlement (RTGS) and the National
Electronic Funds Transfer (NEFT) systems.
Real Time Gross Settlement (RTGS): RTGS system is a funds transfer mechanism where
transfer of money takes place from one bank to another on a real time and on gross
basis. This is the fastest possible money transfer system through the banking channel.
Settlement in real time means payment transaction is not subjected to any waiting period.
The transactions are settled as soon as they are processed. In India, the Reserve Bank of
India (Indias Central Bank) maintains this payment network. Core Banking enabled banks
and branches are assigned an Indian Financial System Code (IFSC) for RTGS and NEFT
purposes. This is an eleven digit alphanumeric code and unique to each branch of bank.
The first four letters indicate the identity of the bank and remaining seven numerals indicate
a single branch. This code is provided on the cheque books, which are required for
transactions along with recipients account number.
National Electronic Fund Transfer (NEFT): The National Electronic Fund Transfer (NEFT)
system is a nation-wide system that facilitates individuals, firms and corporates to
electronically transfer funds from any bank branch to any individual, firm or corporate
having an account with any other bank branch in the country. NEFT requires Indian
financial system code (IFSC) to perform a transaction.
SUMMARY
Banks play a very useful and dynamic role in the economic life of every modern state.
Commercial banks encourage savings habits among the people, help improving the capital
formation in the economy and mobilizing the savings in a productive manner.
Lending and borrowing functions of banks result in credit creation in the economy.
The main functions of commercial banks are receipts of deposits, lending of money for
industrial and commercial purposes, agency services to consumers and general services
like travelers cheques, bank drafts, circular notes etc.
In order to have social control on banks and channelise funds to priority sectors banks
were nationalized in 1969 and 1980. Due to this effort, banks have spread their wings all
over the country.
After the nationalization of banks in 1969, expansion of branches, concentration of banks
in rural areas and promotion of new entrepreneurship etc. have taken place
Even after nationalization, there are many shortcomings likes inter-regional imbalances,
inter-sectoral imbalances, mounting bad and doubtful debts and poor quality of services
etc. These need to be addressed.
MONEY AND
BANKING
Unit 3
Learning Objectives
At the end of this unit, you will be able to :
(b) It manages public debt and is responsible for issue of new loans. For ensuring the
successes of the loan operations it actively operates in the gilt-edged market and advises
the government on the quantum, timing and terms of new loans.
(c) It also sells Treasury Bills on behalf of the Central Government in order to wipe away
excess liquidity in the economy.
(d) The RBI also makes advances to the Central and State Governments which are
repayable within 90 days from the date of advance.
(e) The RBI also acts as an adviser to the government not only on policies concerning
banking and financial matters but also on a wider range of economic issues including
those in the field of planning and resource mobilisation. It has a special responsibility
in respect of financial policies and measures concerning new loans, agricultural finance
and legislation affecting banking and credit and international finance.
(iii) Bankers Bank : The RBI has been vested with extensive power to control and supervise
commercial banking system under the Reserve Bank of India Act, 1934 and the Banking
Regulation Act, 1949. All the scheduled banks are required to maintain a certain minimum
of cash reserve ratio with the RBI against their demand and time liabilities. This provision
enables the RBI to control the credit position of the country.
The RBI provides financial assistance to scheduled banks and state cooperative banks in
the form of discounting of eligible bills and loans and advances against approved securities.
The RBI also conducts inspection of the commercial banks and calls for returns and other
necessary information from banks.
(iv) Custodian of Foreign Exchange Reserves : The RBI is required to maintain the external
value of the rupee. For this purpose it functions as the custodian of nations foreign exchange
reserves. It has to ensure that normal short-term fluctuations in trade do not affect the
exchange rate. When foreign exchange reserves are inadequate for meeting balance of
payments problem, it borrows from the IMF.
The RBI has the authority to enter into exchange transactions on its own account and on
account of government. It also administers exchange control of the country and enforces
the provisions of Foreign Exchange Management Act.
(v) Controller of Credit : Credit plays an important role in the settlement of business
transactions and affects the purchasing power of people. The social and economic
consequences of changes in the purchasing power are serious, therefore, it is necessary to
control credit. Controlling credit operations of banks is generally considered to be the
principal function of a central bank. The RBI, like any other Central Bank, possesses power
to use almost all qualitative and quantitative methods of credit controls. (For details
discussion on instruments of credit controls please refer to the topic Indian Monetary
Policy).
(vi) Promotional Functions : Apart from the traditional functions of a Central Bank, the RBI
also performs a variety of developmental and promotional functions. It is responsible for
promoting banking habits among people and mobilising savings from every corner of the
country. It has also taken up the responsibility of extending the banking system territorially
of the business community who will feel discouraged to borrow. As a result, the
demand for credit will go down. Decreased demand for credit will slow down
investment activities which in turn will affect production and employment .
Consequently, income in general will fall, peoples purchasing power will decrease
and aggregate demand will fall and prices will fall down. This in turn will lead to a
cumulative downward movement in the economy.
On the other hand, if the Central Bank wishes to boost production and investment
activities in the economy, it will decrease the Bank Rate. Decreasing the Bank Rate
will have a reverse effect. As regards Bank Rate in India, it was 10 percent in 1981, 12
percent in 1991, which was reduced (in stages) to 6 per cent in 2003. However, it
was increased to 9 per cent (in stages) in 2014 in order to control inflationary trends
in India.
(b) Open market operations : Open market operations imply deliberate direct sales and
purchases of securities and bills in the market by the Central Bank on its own initiative
to control the volume of credit. When the Central Bank sells securities in the open
market, other things being equal, the cash reserves of the commercial banks decrease
to the extent that they purchase these securities. In effect, the credit-creating base of
commercial banks is reduced and hence credit contracts. On the other hand, open
market purchases of securities by the Central Bank lead to an expansion of credit
made possible by strengthening the cash reserves of the banks. Thus, on account of
open market operations, the quantity of money in circulation changes. This tends to
bring about changes in money rates. An increase in the supply of money through
open market operations causes a down ward movement in the interest rates, while a
decrease of money supply raises interest rates. Change in the rate of interest in turn
tends to bring about the desired adjustments in the domestic level of prices, costs,
production and trade.
(c) Variable reserve requirements : The Central Bank also uses the method of variable
reserve requirements to control credit. There are two types of reserves which the
commercial banks are generally required to maintain (i) Cash Reserve Ratio
(ii) Statutory Liquidity Ratio (SLR). Cash reserve ratio refers to that portion of total
deposits which a commercial bank has to keep with the Central Bank in the form of
cash reserves. Statutory liquidity ratio refers to that portion of total deposits which a
commercial bank has to keep with itself in the form of liquid assets viz - cash, gold or
approved government securities. By changing these ratios, the Central Bank controls
credit in the economy. If it wants to discourage credit in the economy, it increases
these ratios and if it wants to encourage credit in the economy, it decreases these
ratios. Raising of the reserve rates will reduce the surplus cash reserves of the banks
which can be offered for credit. This will tend to contract credit in the system. Reverse
will be effects of reduction in the reserve ratio requirements reflected in the expansion
of the bank credit. At present, (September 2014) cash reserve ratio is 4 per cent and
statutory liquidity ratio is 22 per cent for entire net demand and time liabilities of the
scheduled commercial banks.
charge a penal rate of interest over and above the Bank Rate, for the credit demanded
beyond a prescribed limit.
By making frequent changes in monetary policy, it ensures that the monetary system
in the economy functions according to the nations needs and goals.
SUMMARY
The overall control of the monetary and banking structure of a country lies the Central
Bank of a country.
The main differences between the commercial and central bank are :
o Commercial bank is largely profit seeking institution and deals with public.
o Central bank is not a profit seeking institution and it deals with governments, central
and state banks and other financial institutions.
The main functions of Central Bank are note issue, banker for the government, credit
control, custodian of cash reserves, lender of the last resort etc.
Indias central bank is The Reserve Bank of India. It performs all the above functions.
Monetary policy is implemented by RBI through the instruments of Credit Control.
There are two instruments of credit control, Quantitative or General Measures and
Qualitative or Selective measures.
Quantitative or General Measures:
o These are directed towards influencing the total volume of credit in the banking system
without special regard for the use to which they are put.
o Quantitative weapons have a general effect on credit regulating.
o Quantitative measures consist of bank rate policy, open market operations and
variable reserve requirements.
o The Statutory Liquidity Ratio (SLR) refers to that portion of total deposits which a
commercial bank has to keep with itself in the form of liquid assets.
o The Cash Reserve Ratio (CRR) refers to that portion of total deposits which a
commercial bank has to keep with the Central Bank in the form of cash reserves.
Qualitative or Selective Measures :
o These are directed towards the particular use of credit and not its total volume.
o These are generally meant to regulate credit for specific purposes.
o Qualitative measures consist of consumer credit regulation, issue of directives, rationing
of credit, moral suasion, direct action etc.
Credit policy is amended from time to time to suit the needs of the economy.
SELECT ASPECTS
OF INDIAN
ECONOMY
Unit 6
Budget and
Fiscal Deficits
in India
Learning Objectives
At the end of this unit, you will be able to:
understand the meaning of budget deficit and fiscal deficit.
know how budget and fiscal deficits have progressed over the years.
1990-91 2009-10
` `
(crore) (crore)
1. Revenue Receipts 54,950 5,72,811
2. Capital Receipts of which 39,010 4,51,676
(a) Loan recoveries + other receipts 5,710 33,194
(b) Borrowings & other liabilities 33,300 4,18,482
3. Total Receipts (1+2) 93,960 10,24,487
4. Revenue expenditure 73,510 9,11,809
5. Capital expenditure 31,800 1,12,678
6. Total expenditure (4+5) 1,05,310 10,24,487
7. Budgetary Deficit (3-6) 11,350 Nil
8. Fiscal deficit 44,650 4,18,482
[1 + 2(a) - 6 = 7 + 2(b)]
Fiscal deficit is a more comprehensive measure of the imbalances. It focuses on/measures the
total resource gap and as such fully reflects the impact of the fiscal operations of the indebtedness
of government. It is the measure of excess expenditure over the governments own income.
Fiscal deficit in India have grown rapidly. In the fifteen year period of 1975-90, the fiscal
deficit of the Central Government rose alarmingly from 4.1 per cent of GDP to 7.9 per cent of
GDP. The then present fiscal malaise had been caused by unchecked growth of non planned
revenue expenditure. Non plan revenue expenditure particularly on defense, interest payments
and food and fertiliser subsidies rose sharply during 1980s. In 1991, major steps were taken to
correct the fiscal imbalances. Many expenditures were cut and controlled (e.g. subsidies). Fiscal
deficit was reduced to 4.7 per cent in 1991-92 and to 4.1 per cent in 1996-97. Since 1997-98,
fiscal deficit had again started increasing. It stood at 5.6 per cent in 2000-01. To restore fiscal
discipline, the Fiscal Responsibility and Budget Management (FRBM) Bill was introduced in
2000 and FRBM Act was passed in 2003. The Act aims at reducing gross fiscal deficit by 0.5
per cent of the GDP in each financial year (beginning on April 1, 2000). As a result of the
efforts taken, the fiscal deficit as a proportion of GDP started declining. During 2003-04, it was
4.5 per cent, which declined to 3.3 per cent and 2.5 per cent in 2006-07 and 2007-08 respectively.
World wide financial crisis affected Indian economy also. The extraordinary situation that
emerged due to crisis had led to a sharp shrinkage in the demand for exports. Domestic demand
also shrank leading to a downturn in industry and services sectors. The situation demanded a
fiscal response. The measures taken included increase in the plan expenditure, reduction in
indirect taxes, sector specific measures for textiles, housing, infrastructure, automobiles, micro
and small sectors and exports etc. These, together with debt relief package for farmers and
outlay due to Sixth Pay Commission recommendations led to an upsurge in the fiscal deficit to
6.0 per cent of GDP in 2008-09 and 6.5 per cent in 2009-10 compared with 2.5% for 2007-08.
Fiscal deficit fell down to 4.8 per cent of GDP in 2010-11 as a result of fiscal measures undertaken
consisting of partial roll back of the stimulus given during the last two years. The Budget 2011-
12 estimated a further reduction in fiscal deficit to 4.6 of GDP . However, persistence of
inflationary pressures impairing profit margins and growth of tax revenues from corporate
sector, low level of non-tax revenues, failure to achieve the targeted disinvestment proceeds,
etc. are some of the factors which led to high fiscal deficit to the tune of 5.7 per cent of GDP
during 2011-12.
SUMMARY
Every year the Government of India prepares budget which shows the expected receipts
and expenditure of the government in the coming financial year.
If receipt are equal to the expenditure the budget is balanced.
If receipt are higher than the expenditure the budget is said to be surplus.
If receipts are lower than the expenditure, the budget is said to be deficit one.
Budget deficit is thus the difference between total receipts and total expenditure.
Fiscal deficit is the sum of budget deficit plus borrowings and other liabilities.
SELECT ASPECTS
OF INDIAN
ECONOMY
Unit 7
Balance
of
Payments
2009-10, and 2010-11 fell down considerably. In 2011-12, the net FDI recovered and reached
the level of US $22 billion. Indias foreign exchange reserves comprise foreign exchange assets
(FCA), gold, special drawing rights (SDRs) and reserve tranche position (RTP) in the
International Monetary Fund (IMF). When there is volatility in exchange rate, the Reserve
Bank of India (RBI) intervenes to smoothen it. This results in increase or decrease in the level of
foreign exchange reserves depending upon the type of intervention. Exchange Market
Intervention by RBI means the sale or purchase of currencies by the RBI with the aim of
changing the exchange rate of rupee vis-a- vis on or more currencies. If there is too much
demand for foreign currency (say dollar), it will appreciate too much and Indian rupee will
depreciate. At this point, the RBI intervenes by releasing the dollars (from its reserves) in the
market to stabilize the exchange rate. Similarly, if there is too less demand for foreign currency
(say dollar), it will depreciate and the rupee will appreciate too much. At this point, the central
bank will intervene by purchasing dollars from the market to stabilize exchange rate.
Special Drawing Rights: The Special Drawing Rights (SDRs) were created in 1969 by the IMF,
to supplement a shortfall of preferred foreign exchange reserve assets, namely gold and the US
dollar. SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the
freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in
exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges
between members; and second, by the IMF designating members with strong external positions
to purchase SDRs from members with weak external positions. In addition to its role as a
supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other
international organizations. The SDR today is redefined as a basket of currencies, consisting of
the euro, Japanese yen, pound sterling, and U.S. dollar. The basket composition is reviewed
every five years. Special drawing rights are allocated to member countries by the IMF. A
countrys IMF quota, the maximum amount of financial resources that it is obligated to
contribute to the fund, determines its allotment of SDRs.
The primary means of financing the International Monetary Fund is through members quotas.
Each member of the IMF is assigned a quota, part of which is payable in SDRs or specified
usable currencies and part in the members own currency. The difference between a members
quota and the IMFs holdings of its currency is a countrys Reserve Tranche Position (RTP). RTP
is accounted among a countrys foreign-exchange reserves.
Begining from a low level of US $ 5.8 billion at the end March, 1991, Indias foreign exchange
reserves gradually increased to about 315 billion in May 2008. However, they declined to US $
252 billion at the end of March, 2009. The decline was a fall out of the global crisis showing a
growth of more than 40 per cent. The level of foreign exchange reserves increased to US $ 279
billion at the end March 2010 and further to US $ 305 billion at the end March 2011. However,
they declined to U.S. $ 294 billion at end March 2012.
Region-wise, Indias trade has diversified . Earlier, Europe and USA used to be main partners
of Indias international trade. Now, Asia and ASEAN (Association of South East Asian Nations)
have become Indias major trade partners. This has helped India weather the global crisis
emanating from Europe and America. Asia and ASEAN countries now account for nearly 60
per cent of Indias exports and imports.
Government to the State Governments, constitutional authorities or bodies, autonomous bodies, local
bodies and other scheme implementing agencies for creation of capital assets which are owned by the
said entities;]
(c) prescribed means prescribed by rules made under this Act;
(d) Reserve Bank means the Reserve Bank of India constituted under sub-section (1) of
section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);
(e) revenue deficit means the difference between revenue expenditure and revenue receipts
which indicates increase in liabilities of the Central Government without corresponding increase in
assets of that Government;
(f) total liabilities means the liabilities under the Consolidated Fund of India and the public
account of India.
3. Fiscal policy statements to be laid before Parliament.(1) The Central Government shall lay in
each financial year before both Houses of Parliament the following statements of fiscal policy along with
the annual financial statement and 3[demands for grants except the Medium-term Expenditure Framework
Statement], namely:
(a) the Medium-term Fiscal Policy Statement;
1. 5th July, 2004, vide notification No. G.S.R. 395(E), dated 2nd July, 2004, see Gazette of India, Extraordinary, Part II,
sec. 3(i).
2. Ins. by Act 23 of 2012, s. 146 (w. e. f. 28-5-2012).
3. Subs. by s. 147, ibid., for demand for grants (w. e. f. 28-5-2012).
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(b) the Fiscal Policy Strategy Statement;
(c) the Macro-economic Framework Statement;
1
[(d) the Medium-term Expenditure Framework Statement.]
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[(1A) The statements referred to in clauses (a) to (c) of sub-section (1) shall be followed up with the
Medium-term Expenditure Framework Statement with detailed analysis of underlying assumptions.
(1B) The Central Government shall lay the Medium-term Expenditure Framework Statement referred
to in clause (d) of sub-section (1) before both Houses of Parliament, immediately following the session of
Parliament in which the policy statements referred to in clauses (a) to (c) were laid under sub-section (1).]
(2) The Medium-term Fiscal Policy Statement shall set forth a three-year rolling target for prescribed
fiscal indicators with specification of underlying assumptions.
(3) In particular, and without prejudice to the provisions contained in sub-section (2), the Medium-
term Fiscal Policy Statement shall include an assessment of sustainability relating to
(i) the balance between revenue receipts and revenue expenditures;
(ii) the use of capital receipts including market borrowings for generating productive assets.
(4) The Fiscal Policy Strategy Statement shall, inter alia, contain
(a) the policies of the Central Government for the ensuing financial year relating to taxation,
expenditure, market borrowings and other liabilities, lending and investments, pricing of administered
goods and services, securities and description of other activities such as underwriting and guarantees
which have potential budgetary implications;
(b) the strategic priorities of the Central Government for the ensuing financial year in the fiscal
area;
(c) the key fiscal measures and rationale for any major deviation in fiscal measures pertaining to
taxation, subsidy, expenditure, administered pricing and borrowings;
(d) an evaluation as to how the current policies of the Central Government are in conformity with
the fiscal management principles set out in section 4 and the objectives set out in the Medium-term
Fiscal Policy Statement.
(5) The Macro-economic Framework Statement shall contain an assessment of the growth prospects
of the economy with specification of underlying assumptions.
(6) In particular and without prejudice to the generality of the foregoing provisions the
Macro-economic Framework Statement shall contain an assessment relating to
(a) the growth in the gross domestic product;
(b) the fiscal balance of the Union Government as reflected in the revenue balance and gross
fiscal balance;
(c) the external sector balance of the economy as reflected in the current account balance of the
balance of payments.
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[(6A) (a) The Medium-term Expenditure Framework Statement shall set forth a three-year rolling
target for prescribed expenditure indicators with specification of underlying assumptions and risk
involved.
(b) In particular and without prejudice to the provisions contained in clause (a), the Medium-term
Expenditure Framework Statement shall, inter alia, contain
(i) the expenditure commitment of major policy changes involving new service, new
instruments of service, new schemes and programmes;
(ii) the explicit contingent liabilities, which are in the form of stipulated annuity payments
over a multi-year time-frame;
(iii) the detailed breakup of grants for creation of capital assets.]
(3) Notwithstanding anything contained in sub-section (1), the Reserve Bank may subscribe to the
primary issues of the Central Government securities during the financial year beginning on the 1st day of
April, 2003 and subsequent two financial years:
Provided that the Reserve Bank may subscribe, on or after the period specified in this sub-section, to
the primary issues of the Central Government securities due to ground or grounds specified in the first
proviso to sub-section (2) of section 4.
(4) Notwithstanding anything contained in sub-section (1), the Reserve Bank may buy and sell the
Central Government securities in the secondary market.
6. Measures for fiscal transparency.(1) The Central Government shall take suitable measures to
ensure greater transparency in its fiscal operations in public interest and minimise as far as practicable,
secrecy in the preparation of the annual financial statement and demands for grants.
1. Subs. by Act of 23 of 2012, s. 147, for the Fiscal Policy Strategy Statement (w.e.f. 28-5-2012).
2. Subs. by s. 148, ibid., for sub-section (1) (w.e.f. 28-5-2012).
3. Subs. by s. 148, ibid., for fiscal deficit and revenue deficit (w.e. f. 28-5-2012).
4. Subs. by s. 148, ibid., for 31st March, 2009 (w.e. f. 28-5-2012).
5. Ins. by s. 148, ibid. (w.e.f. 28-5-2012).
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(2) In particular, and without prejudice to the generality of the foregoing provision, the Central
Government shall, at the time of presentation of annual financial statement and demands for grants, make
such disclosures and in such form as may be prescribed.
7. Measures to enforce compliance.(1) The Minister-in-charge of the Ministry of Finance shall
review, every quarter, the trends in receipts and expenditure in relation to the budget and place before
both Houses of Parliament the outcome of such reviews.
(2) Whenever there is either shortfall in revenue or excess of expenditure over the pre-specified levels
mentioned in the Fiscal Policy Strategy Statement and the rules made under this Act during any period in
a financial year, the Central Government shall take appropriate measures for increasing revenue or for
reducing the expenditure (including curtailing of the sums authorised to be paid and applied from and out
of the Consolidated Fund of India under any Act so as to provide for the appropriation of such sums):
Provided that nothing in this sub-section shall apply to the expenditure charged on the Consolidated
Fund of India under clause (3) of article 112 of the Constitution or to any other expenditure which is
required to be incurred under any agreement or contract or such other expenditure which cannot be
postponed or curtailed.
(3)(a) Except as provided under this Act, no deviation in meeting the obligations cast on the Central
Government under this Act, shall be permissible without approval of Parliament.
(b) Where, owing to unforeseen circumstances, any deviation is made in meeting the obligations cast
on the Central Government under this Act, the Minister-in-charge of the Ministry of Finance shall make a
statement in both Houses of Parliament explaining
(i) any deviation in meeting the obligations cast on the Central Government under this Act;
(ii) whether such deviation is substantial and relates to the actual or the potential budgetary
outcomes; and
(iii) the remedial measures the Central Government proposes to take.
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[7A. Laying of review reports.The Central Government may entrust the Comptroller and
Auditor-General of India to review periodically as required, the compliance of the provisions of this Act
and such reviews shall be laid on the table of both Houses of Parliament.]
8. Power to make rules.(1) The Central Government may, by notification in the Official Gazette,
make rules for carrying out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may
provide for all or any of the following matters, namely:
(a) the annual targets to be specified under sub-section (2) of section 4;
(b) the fiscal indicators to be prescribed for the purpose of sub-section (2) of section 3;
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[(ba) the expenditure indicators with specifications of underlying assumptions and risk involved
under clause (a) of sub-section (6A) of section 3;]
(c) the forms of the Medium-term Fiscal Policy Statement, 3[Fiscal Policy Strategy Statement,
Medium-term Expenditure Framework Statement] and Macro-economic Frame Work Statement
referred to in sub-section (7) of section 3;
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[(ca) the per cent. of revenue deficit to be specified after the 31st March, 2015 under
sub-section (1) of section 4;]