67) Which among the following statements is correct?
i) The Fiscal responsibility legislation capped the overall deficit for all states at 3% of GSDP
ii) The Fiscal responsibility legislation mandates that states must eliminate revenue deficit by 2008-9 (later extended to 2009/10)
67) Which among the following statements is correct?
i) The Fiscal responsibility legislation capped the overall deficit for all states at 3% of GSDP
ii) The Fiscal responsibility legislation mandates that states must eliminate revenue deficit by 2008-9 (later extended to 2009/10)
The correct option is C c) Both i and ii
67 Ans C
Explanation: The FRBM Act, 2003 (as amended), which became effective from July 5, 2004 mandates the Central Government to eliminate revenue deficit by March, 2009 and to reduce fiscal deficit to an amount equivalent to 3 per cent of GDP by March,2008. The annual targets for fiscal correction were to be specified by rules to be framed under the Act. Accordingly, Government notified the rules under the FRBM Act on July 2, 2004, which came into force on July 5, 2004. The rules made under FRBM Act specify the annual targets for reduction of fiscal and revenue deficits, annual targets for assuming contingent liabilities in the form of guarantees and the total liabilities as a percentage of GDP (Box 2.7). The rules also prescribe the formats for the medium term fiscal policy statement, the fiscal policy strategy statement and the macro-economic framework statement, which are required to be presented to Parliament along with the annual financial statement. Fiscal indicators to be presented in the medium term fiscal policy statement are also prescribed in the rules.
c) Both i and ii
67 Ans C
Explanation: The FRBM Act, 2003 (as amended), which became effective from July 5, 2004 mandates the Central Government to eliminate revenue deficit by March, 2009 and to reduce fiscal deficit to an amount equivalent to 3 per cent of GDP by March,2008. The annual targets for fiscal correction were to be specified by rules to be framed under the Act. Accordingly, Government notified the rules under the FRBM Act on July 2, 2004, which came into force on July 5, 2004. The rules made under FRBM Act specify the annual targets for reduction of fiscal and revenue deficits, annual targets for assuming contingent liabilities in the form of guarantees and the total liabilities as a percentage of GDP (Box 2.7). The rules also prescribe the formats for the medium term fiscal policy statement, the fiscal policy strategy statement and the macro-economic framework statement, which are required to be presented to Parliament along with the annual financial statement. Fiscal indicators to be presented in the medium term fiscal policy statement are also prescribed in the rules.
