FRBM Act (Fiscal Responsibility and Budget Management Act) 2003-04
The FRBM Act, enacted in 2003 and effective from 2004, aimed to promote financial discipline and support economic stability in India. It marked a shif
FRBM Act (Fiscal Responsibility and Budget Management Act) 2003-04: The FRBM Act , enacted in 2003 and effective from 2004, aimed to promote financial discipline and support economic stability in India. It marked a shift from yearly budgeting to a long-term fiscal planning approach . The main objectives and rules under the Act include: Key Goals Reducing Revenue Deficit : Aim: Decrease revenue deficit by 0.5% of GDP yearly (starting from 2004-05). Target: Eliminate revenue deficit entirely by March 31, 2008 . Reducing Fiscal Deficit : Aim: Reduce fiscal deficit by 0.3% of GDP yearly (starting from 2004-05). Target: Bring fiscal deficit to 3% of GDP by March 2008 . Exceptions : Government could deviate from these goals only in special cases like natural disasters , national security crises , or exceptional situations . Borrowing Rules The government is not allowed to borrow from the Reserve Bank of India (RBI) for short-term needs, except under the Ways and Means Advances (WMA) route. Policy Statements to Pa…