What is the main objective of Fiscal Responsibility and Budget Management Act (FRBMA), 2003?

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SSC CHSL Exam 2024 Tier-I Official Paper (Held On: 02 Jul, 2024 Shift 2)

Answer 1

The correct answer is To reduce fiscal deficit

Key Points

The main objective of the Fiscal Responsibility and Budget Management Act (FRBMA), 2003 is to reduce the fiscal deficit of the government.
The act aims to ensure inter-generational equity in fiscal management and long-term macroeconomic stability.
It provides a legal institutional framework for reducing the fiscal deficit and improving fiscal discipline.
FRBMA mandates the government to present to the Parliament a medium-term fiscal policy statement, a fiscal policy strategy statement, and a macro-economic framework statement annually along with the budget.
The act also sets targets for reducing government debt and maintaining prudent levels of public spending and borrowing.

Additional Information

The FRBMA was enacted by the Parliament of India in August 2003.
The act was amended in 2018 to replace the fiscal deficit targets with a fiscal roadmap and to introduce a debt-to-GDP ratio target.
According to the act, the central government is required to limit the fiscal deficit to 3% of GDP by the end of a specified period.
The act also aims to eliminate revenue deficit and bring down the public debt-to-GDP ratio to a sustainable level over the medium term.
Effective implementation of the FRBMA is crucial for achieving fiscal consolidation and enhancing the credibility of the government's fiscal policy.