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Fiscal Responsibility and Budget Management (FRBM) Act, 2003:
- The FRBM Act, 2003 aims to institutionalize fiscal discipline and reduce fiscal deficits.
- It mandates the Central Government to maintain transparency in fiscal operations.
- The Act originally targeted reducing the fiscal deficit to 3% of GDP.
- FRBM promotes long-term macroeconomic stability through prudent public finance management.
- It requires the government to present Medium-Term Fiscal Policy and other fiscal reports to Parliament.
- The Act restricts the Centre from borrowing from the Reserve Bank of India, except under exceptional circumstances.
- It was amended multiple times to relax targets due to global and domestic crises.
- The N.K. Singh Committee (2017) suggested a debt-to-GDP ratio of 60% by 2023.
- FRBM introduced greater accountability by setting clear fiscal deficit and revenue deficit targets.
- It serves as a cornerstone of India’s fiscal policy framework to ensure intergenerational equity.
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