The Advocacy Paper titled ‘Preserving Growth Momentum: A Politically Viable Framework for Fiscal Prudence’ undertakes an examination of the current perilous state of public finances in India, analyzes the imminent dangers to the country’s fiscal future and proposes institutional mechanisms within the Indian Constitutional framework to incentivise fiscal prudence and safeguard the long-term interests of the country. 

The primary challenge in a democracy lies in balancing short-term political gains with the long-term welfare of the public. The paper argues it is possible to restore public finances to health if reasonable steps are taken before it is too late. 

Preserving Growth Momentum gives a detailed account of the dangers of reverting to the Old Pension Scheme (OPS), the perverse incentives at play that prevent course-correction, global practices in providing social security, the role of the Union government under the Constitutional framework and the various possible measures to ensure fiscal prudence.

Key features of this framework include:

• Mandating zero Revenue Deficit as a pre-condition for borrowing
• Mandating States transitioning to the OPS to establish a sinking fund to cover anticipated long-term pension obligations.
• Delegate the authority granted by Article 293 to an independent entity to eliminate political partisanship and ensure broad political consensus.
• Establish an autonomous body to provide impartial evaluation of public finances, scrutiny of policy costs, and assessment of adherence to fiscal rules.