Fiscal Responsibility and Budget Management
The Fiscal Responsibility and Budget Management Act, 2003 or the FRBMA was an Indian law that aimed to institutionalise financial discipline and diminish the country’s fiscal deficit. It also aimed at improving macroeconomic management and the larger operation of public funds by heading for a balanced budget.
The chief objective behind the act was to remove India’s revenue deficit (thereafter creating a revenue surplus) and reduce the fiscal deficit to a reasonable 3% of the Gross Domestic Product by 2008 March. But this deadline was postponed and then deferred in 2009 owing to the global financial crisis of 2007. But in 2011, because of the ongoing recovery process, the Economic Advisory Council openly counselled GOI to reconsider restoring the FRBMA’s provisions. This act was introduced in parliament by the then minister of finance Yashwant Sinha.