FRBMA Full Form

What is the Full Form of FRBMA?

The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) is an Act of the Parliament of India that aims to strengthen fiscal prudence, institutionalize financial discipline, reduce India's fiscal deficit, improve macroeconomic management, and manage public finances more effectively overall. The primary goals were to end the country's revenue deficit, generate revenue surpluses going forward, and reduce the fiscal deficit to a tolerable 3% of GDP by March 2008. The deadlines for implementing the act's goals were initially delayed and then were suspended in 2009 as a result of the global financial crisis that began in late 2007.

FRBM ACT

In order to institutionalize fiscal discipline throughout the nation, the Atal Bihari Vajpayee administration sponsored the Fiscal Responsibility and Budget Management (FRBM) Bill in the Indian parliament in 2000. The FRBM Act was subsequently passed in 2003. A law passed by the parliament established goals for the Indian government to enhance fiscal responsibility, strengthen fiscal restraint, and establish financial discipline.

Objectives Of FRBM

The elimination of the income shortfall and reduction of the budgetary deficit were the main goals.

The additional goals were as follows:

• Establishing a transparent budgetary management system for the nation

• Ensuring a fair allocation of the debt over time

• Ensuring long-term fiscal stability

• The act also aimed to provide the Central Bank with the necessary latitude to control inflation in India.

Significant Features Of FRBM

The act stipulated that the following must be submitted to Parliament each year together with the Budget documents:

• Statement of the macroeconomic framework

• Fiscal Policy Strategy Statement and Medium-Term Fiscal Policy Statement

• The medium-term fiscal policy statement should include projections for the four fiscal indicators, including revenue deficit as a percentage of GDP, fiscal deficit as a percentage of GDP, tax revenue as a percentage of GDP, and total outstanding liabilities as a percentage of GDP.

The FRBM Act's targets and fiscal indicators

Accordingly with the current FRB Act target:

• By March 31, 2021, the government must keep the fiscal deficit to 3% of the GDP or less.

• Government must keep the national debt under control.

• By the year 2024–2025, the government must keep its debt to the federal government to 40% of GDP.

NK Singh Committee And Strategies

The following are the recommendations of the N K Singh Committee:

Targets: The group recommended using debt as the major fiscal policy aim and requiring completion by 2023.

The group suggested establishing an independent Fiscal Council with a chairperson and two members chosen by the Center (not employees of the government at the time of appointment)

Deviations: The committee recommended that the government's reasons for departing from the FRBM Act targets be made very explicit.

Borrowings: The committee's recommendations state that the government shouldn't borrow money from the RBI until The Center must make up for a brief shortage in receipts.