What are the reasons for the introduction of fiscal responsibility and budget management Frbm Act 2003 discuss critically the salient features and their effectiveness?

Fiscal Responsibility and Budget Management (FRBM) Act was enacted in 2003. The objective of the Act is to ensure inter-generational equity in fiscal management, long-run macroeconomic stability, better coordination between fiscal and monetary policy, and transparency in the fiscal operations of the Government.

What is the target of FRBM Act?

The target for the last financial year was revised to 9.5\% of GDP from 3.5\% earlier, while that for the current year has been set at 6.8\% of GDP from the previous aim of 3.3\%. The centre is aiming to bring down the fiscal deficit target to 4.5\% of GDP by 2025-26 (Apr-Mar).

What is the FRBM Act?

The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in 2003 which set targets for the government to reduce fiscal deficits. The targets were put off several times. In May 2016, the government set up a committee under NK Singh to review the FRBM Act. The government believed the targets were too rigid.

What is the impact of FRBM on the economy?

Also, FRBM has a severe impact on the development and credit growth in the Economy, which was engines of GDP expansion. FRBM is an important Act enacted by India’s Government to make our country manage its fiscal balance in a more prudent and systematic manner.

What is Fiscal Responsibility and Budget Management Act?

The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in 2003 which set targets for the government to reduce fiscal deficits. In Budget 2017, Finance Minister Arun Jaitley deferred the fiscal deficit target of 3\% of the GDP and chose a target of 3.2\%, citing the NK Singh committee report. What is FRBM Act?

What are the fiscal deficit targets of the FRBM Act?

The recommendations of the committee read that the government must target a fiscal deficit of 3 percent of the GDP in years up to March 31, 2020, subsequently cut it to 2.8 percent in 2020-21 and to 2.5 percent by 2023. This article spoke about the FRBM Act, its provisions and targets.