The committee recommended that the government should target a fiscal deficit of 3 per cent of the GDP in years up to March 31, 2020, cut it to 2.8 per cent in 2020-21 and to 2.5 per cent by 2023. Under the Fiscal Responsibility and Budget Management Act (FRBMA) 2003, both the Centre and States were supposed to wipe out revenue deficit and cut fiscal deficit to 3% of GDP by 2008-09, thus bringing much needed fiscal discipline. Alex is the founder of ClearIAS and one of the expert Civil Service Exam Trainers in India. Much of the borrowing was utilized for interest payments of previous borrowings, but not for productive-purposes. FRBM Act is all about maintaining a balance between Government revenue and government expenditure. by the Government after formal consultations and advice of the Fiscal Council. He is the author of many best-seller books like 'Important Judgments that transformed India' and 'Important Acts that transformed India'. Fiscal Deficit Target – fiscal deficit should be reduced to 3% of GDP by March 31, 2015. In 2018, the FRBM Act was further amended. What is FRBM Act? Since there is a plethora of information on this subject, candidates should keep a note of all the points and material they have on this subject neatly classified. This terminology was innovated by the NK Singh Committee on FRBM. The central government agreed to the following fiscal indicators and targets, subsequent to the enactment of the FRBMA 1. High fiscal deficit was the one major macroeconomic problem faced … Specific details were updated in sub-section (2) of Section 4. It is an act of the parliament that set targets for the Government of India to establish financial discipline, improve the management of public funds, strengthen fiscal prudence, and reduce its fiscal deficits. In India, the borrowing levels were very high in the 1990s and 2000s. The topic is important for IAS Exam, hence this article will be talking about the FRBM act in detail which will be useful for the civil services exam. The FRBM rules mandate four fiscal indicators to be projected in the medium-term fiscal policy statement. This bill was passed by the Indian Parliament in 2003 and came to be known as the Fiscal Responsibility and Budget Management Act. Revenue deficit to be eliminated by the 31st of March 2009. The Act provides room for deviation from the annual fiscal deficit target under certain conditions. The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in 2003 which set targets for the government to reduce fiscal deficits. It is a legal step to ensure fiscal discipline and fiscal consolidation in India. Fiscal deficit of 3.8% estimated in Revised Estimates (RE) 2019-20 and 3.5% for Budget Estimates (BE) 2020-21. Adopt the 3 Strategies for Success in the UPSC Civil Services Exam. But the benefit from high expenditure and debt today goes to the present generation. Revenue Deficit Target – revenue deficit should be completely eliminated by March 31, 2018. Finance Minister Nirmala Sitharaman had set a fiscal deficit target of 3.3 percent for the fiscal (FY 2019-20) year. Dec 12, 2020 - FRBM Act 2003 Video | EduRev is made by best teachers of UPSC. For details check the details of the budget documents. The recommendations of the committee read that the government must target a fiscal deficit of 3 percent of the GDP in years up to March 31, 2020, subsequently cut it to 2.8 percent in 2020-21 and 2.5 percent by 2023. This article spoke about the FRBM Act, its provisions, and targets. Finance Minister deferred the fiscal deficit target of 3.2% due to several factors such as low GST collections, spike in oil prices and pressure to spend more. The minimum annual reduction target was 0.3% of GDP. 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