In a multiparty parliamentary system, electoral concerns play an important role in determining expenditure policies. The enactment of the FRBMA, on Aug. 2003, marked a turning point in fiscal reforms, binding the Govt. through an institutional framework to pursue a prudent fiscal policy. The act mandates the Central Govt. to take appropriate measures to reduce fiscal deficit to not more than 3 percent of GDP and to eliminate the revenue deficit by 31 March, 2009. It requires the reduction in fiscal deficit by of GDP each Year and revenue deficit by 0.5 percent. If it is not achieved through tax revenues, the necessary adjustment has to come from a reduction in expenditure. The Central Govt. must ensure intergenerational equity and long-term macroeconomic stability by achieving sufficient revenue surplus, removing fiscal obstacles to monetary policy, and effective debt management by limiting deficits and borrowings. The rules under the act were notified with effect from July 2004.
What do you mean by FRBMA?
The correct answer is Fiscal Responsibility and Budget Management Act (FRBMA) 2003.
- The FRBMA was enacted in 2003 to institutionalize financial discipline and reduce fiscal deficits.
- It aimed to improve macroeconomic stability by ensuring better debt management and limiting government borrowing.
- The act mandated a reduction in fiscal deficit to 3% of GDP and elimination of revenue deficit by 2009.
Important Questions from Determination of Income and Employment
MPS is defined as:
Identify the term that is called National Income of an Economy:
In 1955, a committee was formed for promoting Rural Development through small-scale industries. Choose the name of the committee from the following:
Identify the incorrect statement in the context of Employment:
Thermal power plant uses ________ to produce thermal energy:
