Q. Consider the following statements related to the Fiscal Responsibility & Budget Management(FRBM) Act in India:
Which of the above statements are correct?
Q. Consider the following statements related to the Fiscal Responsibility & Budget Management(FRBM) Act in India:
Which of the above statements are correct?
The correct option is C 1 and 2 only
Explanation:
Statement 1 is correct: The FRBM Act aims to introduce transparency and stability in India's fiscal management systems. The FRBM Act was enacted to introduce a more equitable distribution of India's debt over the years. This also gives the RBI necessary flexibility to deal with Inflation under the Monetary Policy Framework.
Statement 2 is correct: The original framework tried to bring down the fiscal deficit by 0.3% per year and bring it down to 3% by 2008-09. But the Government of India has not been able to achieve targets set under it. The Act has been amended several times. As per the recent amendment, the target to reach a fiscal deficit level below 4.5% of GDP has been set to be achieved by 2025-26.
Statement 3 is incorrect: The FRBM Review Committee was formed in 2016 under the chairmanship of N.K.Singh with a mandate to review the Fiscal Responsibility & Budget Management (FRBM) Act. It recommended using Public debt as the primary target for fiscal policy and a debt to GDP ratio of 60% should be targeted by 2023 (40% limit for the center and 20% limit for the states).
Explanation:
Statement 1 is correct: The FRBM Act aims to introduce transparency and stability in India's fiscal management systems. The FRBM Act was enacted to introduce a more equitable distribution of India's debt over the years. This also gives the RBI necessary flexibility to deal with Inflation under the Monetary Policy Framework.
Statement 2 is correct: The original framework tried to bring down the fiscal deficit by 0.3% per year and bring it down to 3% by 2008-09. But the Government of India has not been able to achieve targets set under it. The Act has been amended several times. As per the recent amendment, the target to reach a fiscal deficit level below 4.5% of GDP has been set to be achieved by 2025-26.
Statement 3 is incorrect: The FRBM Review Committee was formed in 2016 under the chairmanship of N.K.Singh with a mandate to review the Fiscal Responsibility & Budget Management (FRBM) Act. It recommended using Public debt as the primary target for fiscal policy and a debt to GDP ratio of 60% should be targeted by 2023 (40% limit for the center and 20% limit for the states).
