This Act may be called the Fiscal Responsibility and Budget Management Act, .. G.S.R. (E), dated 7th May, , see Gazette of India. The FRBM Act is a fiscal sector legislation enacted by the government of India in , aiming to ensure fiscal discipline for the centre by. Responsibility and Budget Management (FRBM) Act. While the . FRBM Act, the fiscal deficit was to be reduced steadily to 3% of gross.

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The FRBM Act was enacted in as rising government borrowing and the resultant government debts have seriously eroded the financial health of the government.

The report of the review committee is presently [ when? To see your saved stories, click on link hightlighted in bold. Centre for Budget and Governance Accountability.

Drag according to your convenience. It gives the responsibility to the government to adhere to these targets. The central government at the time of presentation of the annual budget shall disclose the significant changes in accounting standards, policies and practices drbm to affect the computation of fiscal indicators.

After receiving the assent of the Ffrbm, it became an Act in August In Budgetthe government is not likely to meet its fiscal deficit target of 3. What are the amendments to it?

What is Fiscal Responsibility and Budget Management (FRBM) Act? What are the amendments to it?

While remaining committed to fiscal prudence and consolidation, Budget stated that a review of the FRBM Act is necessary in the context of the uncertainty and volatility in the global economy. In this Bill numerical targets for various fiscal indicators were specified.

The finance minister shall also make statement in both houses of parliament if there is any deviations in meeting the obligations of the central government. Further, the Act prohibits borrowing by the government from the Reserve Bank of India, thereby, making monetary policy independent of fiscal policy.


The task force stated that under the reforms measures recommended by it, tax GDP ratio of the central government should be raised from 9. This was in view of the new school of thought which believes that instead of fixed numbers as fiscal deficit targets, it may be better to have a fiscal deficit range as the target, which would give necessary policy space to the Government to deal with dynamic situations.

Retrieved 22 February The government has also reduced revenue deficit to 2.

The States have achieved the targets much ahead the prescribed timeline. However, other 20013 insisted that the act would benefit the country by maintaining stable inflation rates which in turn would promote social progress. As per the amendments inthe Central Government has to take appropriate measures ftbm reduce the fiscal deficit, revenue deficit and effective revenue deficit to eliminate the effective revenue rfbm by the 31st March, and thereafter build up adequate effective revenue surplus and thereafter as may be prescribed by rules made by the Central Government.

Further, the Central Government may entrust the Comptroller and Auditor-General of India to review periodically as required, the compliance of the provisions of FRBM Act and such reviews shall be laid on the table of both Houses of Parliament.

These two important features are fbrm follows: Though the Fiscal Responsibility and Budget Management Act or Amended FRBM bill is a credible effort by the government to fix responsibility on the government to reduce fiscal deficit and bring transparency in fiscal operations of the government it has certain limitations.

Why is it always discussed around the Budget? Will be displayed Will not be displayed Will be displayed. Vide the Finance Actthe target dates for achieving the prescribed rates of effective deficit and fiscal deficit were further extended.

Fiscal Responsibility and Budget Management FRBM Act

Food Subsidy is the star but may invite WTO attention. Though the Act aims to achieve deficit reductions prima facie, an important objective is to achieve inter-generational equity in fiscal management. The Act bans the purchase of primary issues of the Central Government securities by the RBI afterpreventing monetization of government deficit. Taking into account the recommendations of the Standing Committee, a revised Bill was introduced in April Firstly, the bill highlighted the terrible state of government finances in India both at the Union and the state levels under the statement of objects and reasons.


In andnotable amendments were made.

Fiscal Responsibility and Budget Management (FRBM) Act

Amendments to the Act were made after its initial version in It consists of 10 chapters, 4 volumes and 6 annexures:. If deviations are substantial then the Finance Minister will declare the remedial measures which the central government proposes to take in future period of time. Fiscal deficit is not only the cause for higher inflation.

Similarly, revenue deficit has to be reduced by 0. Fiscal deficit as percentage of GDP.

The Comptroller and Auditor General of Zct had pulled up the government for deferring the targets which it said should have been done through amending the Act.

The borrowing again produced high interest payments. The provisions of the bill impose restrictions on only the central government but state governments are out of its scope.

FRBM Act – General Knowledge Today

The Fiscal Responsibility and Budget Management Act, FRBMA is an Act of the Parliament of India to institutionalize financial discipline, reduce India’s fiscal deficit, improve macroeconomic management and the overall management of the public funds by febm towards a balanced budget and strengthen fiscal prudence.

Government of India will not include the debt taken over by the States as per the above scheme in the calculation of fiscal deficit of respective States in the financial years and Views Read View source View history.

October 5, at