Consistency lacks in FRBM Rules 2004

The Fiscal Responsibility and Budget Management Act, 2003 mandated to eliminate revenue deficit and contain Fiscal deficit. A minimum reduction in deficits were prescribed in The Fiscal Responsibility and Budget Management Rules, 2004 rules. In order to improve fiscal transparency the FRBM Rules prescribed a statement containg three elements:
a. Macroeconomic Framework Statement: This report shows the underlying assessment of
growth prospects, and the underlying assumptions. It defines the macroeconomic backdrop
under which the fiscal policies and projections are being made.
b. Fiscal Policy Strategy Statement: This report specifies the policy measures pertaining to taxation, expenditure, subsidies, administered prices and borrowing.
c. Medium-term Fiscal Policy Statement: This report specifies three-year rolling targets for prescribed fiscal indicators, and the underlying assumptions.

The macroeconomic framework statement is the real anchor, as the key fiscal indicators are measure in respect to GDP at current market prices and the target ratios are sensitive to the denominator. For example, if the medium term fiscal policy statement wish to lay down targetted reduction in key fiscal indicators for Y+1 and Y+2, the GDP at current market prices for Y+1 and Y+2 assumes significance as denominators.

The prescribed template in macroeconomic Framework Statement however does not share this vision. It covers actual data for Apr/Reporting period for the previous and current year. Moreover, the template is seemingly outdated on certain descriptors and data categories:
a. The GDP at Factor cost at current price is not relevant as the Fiscal deficit indicator requires GDP at current market prices as a denominator.
b. The GDP series in base 1993/94 prices are not longer relevant.
c. Point-to-Point WPI cannot capture the inflation for a span reference period.
d. Foreign Exchange Assests is a non-existent data; either it is foreign exchange reserves or foreign currency assets, which is FX reserves excluding gold and SDRs, RTP at IMF )