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    029) FRBM 2003

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    Bhargav Raj
    The FRBM Act was passed to eliminate revenue deficit and reduce fiscal deficit through transparent fiscal management and debt distribution. It mandates macroeconomic, medium-term fiscal policy, and fiscal strategy statements be presented annually. The act allows deficit targets to be exceeded in specific situations like national security or economic reforms with unanticipated fiscal implications.

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    029) FRBM 2003

    Uploaded by

    Bhargav Raj
    3 views3 pages
    The FRBM Act was passed to eliminate revenue deficit and reduce fiscal deficit through transparent fiscal management and debt distribution. It mandates macroeconomic, medium-term fiscal policy, and fiscal strategy statements be presented annually. The act allows deficit targets to be exceeded in specific situations like national security or economic reforms with unanticipated fiscal implications.

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    The FRBM Act was passed to eliminate revenue deficit and reduce fiscal deficit through transparent fiscal management and debt distribution. It mandates macroeconomic, medium-term fiscal policy, and fiscal strategy statements be presented annually. The act allows deficit targets to be exceeded in specific situations like national security or economic reforms with unanticipated fiscal implications.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    3 views3 pages

    029) FRBM 2003

    Uploaded by

    Bhargav Raj
    The FRBM Act was passed to eliminate revenue deficit and reduce fiscal deficit through transparent fiscal management and debt distribution. It mandates macroeconomic, medium-term fiscal policy, and fiscal strategy statements be presented annually. The act allows deficit targets to be exceeded in specific situations like national security or economic reforms with unanticipated fiscal implications.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    FRBM 2003

    Why was the FRBM Act passed?


    The primary objective was the elimination of revenue
    deficit and bringing down the fiscal deficit.
    The other objectives included:
    • Introduction of a transparent system of fiscal
    management within the country
    Ensuring equitable distribution of debt over the years
    Ensuring fiscal stability in the long run
    The act also intended to give the required flexibility to
    the Central Bank for managing inflation in India.
    Features of the FRBM Act
    It was mandated by the act that the following must be
    placed along with the Budget documents
    annually in the Parliament:
    1. Macroeconomic Framework Statement
    2. Medium Term Fiscal Policy Statement and
    3. Fiscal Policy Strategy Statement

    WHAT IS MACRO-ECONOMIC FRAMEWORK STATEMENT


    Every year, a macro-economic framework statement is presented before Parliament at the time of
    Union Budget presentation. This is under Section 3(5) of the Fiscal Responsibility and Budget
    Management (FRBM) Act, 2003.
    The FRBM Act instructs the government to make an assessment of growth prospects for the economy
    with regards to specific underlying assumptions. The statement contains an overview of the economy.
    This includes an assessment regarding the GDP growth rate, fiscal balance of the central government
    and the external sector balance of the economy.

    The Medium-term Fiscal Policy


    The Medium-term Fiscal Policy Statement, presented to Parliament under Section 3(2) of the Fiscal
    Responsibility and Budget Management (FRBM) Act, 2003, sets out three-year rolling targets for four
    specific fiscal indicators in relation to gross domestic product (GDP) at market prices
    Deficit, (ii) Fiscal Deficit, (ii) Tax to GDP ratio and (iv) Total outstanding Debt at the end of the year

    WHAT IS FISCAL POLICY STRATEGY STATEMENT


    The Fiscal Policy Strategy Statement, presented to Parliament under Section 3(4) of the Fiscal
    Responsibility and Budget Management (FRBM) Act, 2003, outlines the strategic priorities of the
    government in the fiscal area for the ensuing financial year relating to taxation, expenditure, lending
    and investments, administered pricing, borrowings and guarantees. The statement explains how the
    current policies are in conformity with sound fiscal management principles and gives the rationale for
    any major deviation in key fiscal measures.

    t.me/hopetush www.hopetushant.co m https://youtube.com/c/HOPETushantYadav


    &

    F
    FRBM Act Pection 4(2) Provides for a

    trigger
    mechanism to
    escape the
    deficit
    control related clauses in the Act ie

    in
    Government the
    targets
    can overcross

    following situations
    the

    a) National
    Pecurity / Act of was
    National
    Calamity
    &
    If agriculture output &
    fam sucome collapse
    & Fall Real
    beyond
    in
    output/GDP growin rate
    certain %.
    & Structural unanticipated
    reforms in Economy with

    fiscal Implications
    .

    NOTE : Deviate
    only to
    up 0 5%
    .

    of GDP.
    W

    BUDGET > 3 8%
    3 3% -
    2019-20
    %
    = .

    2020-21 I D
    -

    4 2020 - 21 =
    3% >
    - 3 5%.

    2020 COVID-19

    -
    FRBM Amended To Provide FD = 6 8%
    .

    (2021-22)
    & 4% (2025-26 I
    4% 15M FC
    * BIC
    target by
    .

    t.me/hopetush www.hopetushant.co m https://youtube.com/c/HOPETushantYadav

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