FRBM Framework and Government Debt Limits
The Fiscal Responsibility and Budget Management (FRBM) framework is a key legislation in India designed to bring fiscal discipline. It mandates the government to manage public finances effectively, aiming to reduce the fiscal deficit and government debt.
The FRBM Act sets specific targets for the government concerning its debt levels. This question focuses on the mandated limits for the Central Government Debt and the General Government Debt, specifically by $31^{st}$ March 2025.
FRBM Debt Targets for March 2025
As per the FRBM framework's stipulations, the Central Government is required to adhere to certain debt-to-GDP ratio limits. For the fiscal year ending $31^{st}$ March 2025, the targets are established as follows:
- Central Government Debt: This is targeted to be kept at or below 40 percent of GDP.
- General Government Debt: This broader measure, encompassing both central and state government liabilities, is targeted to be kept at or below 60 percent of GDP.
These percentages represent the maximum allowable ratio of the respective debts to the Gross Domestic Product (GDP) by the specified date. Meeting these FRBM debt limits is considered vital for maintaining India's macroeconomic stability and ensuring sustainable economic growth.
Important Questions from Economic development
- Below mentioned are four countries having largest Foreign Exchange Reserves in the world in October 2024. Arrange these countries in decreasing order of their Foreign Exchange Reserves.
i. India
ii. Japan
iii. China
iv. Switzerland
Choose the correct order: - Arrange the following sources of revenue for the Government of India mentioned in the Union Budget of 2024-25 in descending order:
i. Goods & Service Tax & other taxes
ii. Borrowing and Other Liabilities
iii. Corporation tax
iv. Income Tax
Choose the correct answer: - Consider the following statements regarding National Electronic Fund Transfer (NEFT) and Real-Time Gross Settlement (RTGS):
1. In National Electronic Fund Transfer (NEFT), the transaction happens in batches and hence it is slow
2. In Real-Time Gross Settlement(RTGS), transactions happen in real time and hence being fast
3. There is no minimum limit in RTGS
4. There is a Rs 2 Lakh minimum limit for NEFT
How many of the above Statement/s is/are correct? - Consider the following statements regarding the "Monetary Policy Committee".
i. The RBI Governor has to vote both in the first instance and in case of a tie.
ii. The monetary policy committee has to meet three times a year.
Choose the correct answer: - "Quotas are the building blocks of the IMF's financial and governance structure. An individual member country's quota broadly reflects its relative position in the world economy". In the above context, which of the following parameters are used to calculate quota?
i. GDP of the country
ii. Degree of Openness
iii. Demographic dividend
iv. Economic variability
v. International Reserves
Choose the correct answer based on the code given below:
