TNPSC Indian Economy Study Materials - FRBM Act - Fiscal Responsibility and Budget Management Act, 2003

TNPSC Indian Economy Study Materials - FRBM Act - Fiscal Responsibility and Budget Management Act, 2003

TNPSC Guru - This FRBM act can be asked in TNPSC Group 1 Mains

FRBM Act

FRBM enacted in 2003, to ensure fiscal discipline and to reduce fiscal deficit by moving towards a balanced budget.

Received President's Assent - August 26, 2003

Came to an effect from - June 5, 2004

Chairman of the review committee of the FRBM Act - N K Singh 

Rules / Features of the Act 2003.

• Revenue Deficit
• Eliminated by - March 31, 2009
• Minimum Annual reduction - 0.5% of GDP in each financial year
• Fiscal Deficit
• Minimum Annual reduction - 0.3% of GDP in each financial year
• To reach 3% of fiscal deficit by - 2008-2009 Financial year 
• Debt
• Minimum Annual reduction - 1% of GDP in each financial year
• To reach total debt within - 6% by 2007-2008
• Finance minister to review the trends in receipts and expenditure quarterly.
• RBI not to subscibe the government bond from - April 1, 2006 
• Four indicators to be projected in the medium term fiscal policy statement
1. Revenue Deficit as a % of GDP.
2. Fiscal Deficit as a % of GDP
3. Tax Revenue as a % of GDP
4. Total outstanding liabilities as a % of GDP