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 were the rules under the Act of FRBMA notified with effect from July 2004?
To remove fiscal obstacles to monetary policy and effective debt management
The correct answer is To remove fiscal obstacles to monetary policy and effective debt management.
- The FRBMA focused on improving financial stability.
- It aimed to control government borrowing and debt.
- It also enhanced monetary policy efficiency by reducing fiscal constraints.
Important Questions from Government Budget and the Economy
Match List-I with List-II:
List-I List-II (A) Export of Goods (I) Debit side of the Capital A/c (B) Import of Services (II) Credit side of the Capital A/c (C) Investment into Abroad (III) Debit side of the Current A/c (D) Borrowings from Abroad (IV) Credit side of the Current A/c Choose the correct answer from the options given below:
Fly Ash, produced as a residual in thermal power plants, will not produce:
Privatisation of the public sector enterprises by selling off part of the equity of PSEs to the public is known as
Tax imposition on goods leads to a proportionate rise in prices. This effect is known as:
The government sector affects the personal disposable income of households by making transfers and collecting taxes. The above statement refers to which objective of the government budget?
