FRBM Act Explained
The Fiscal Responsibility and Budget Management (FRBM) Act, 2003, is a law aimed at ensuring fiscal discipline by setting targets for the government's deficits and debt.
The Fiscal Responsibility and Budget Management (FRBM) Act, 2003, is a law aimed at ensuring fiscal discipline by setting targets for the government's deficits and debt.
Objectives
The Act seeks to reduce the fiscal deficit, improve macroeconomic management and ensure inter-generational equity by limiting how much the government borrows.
Escape clause
The Act includes an 'escape clause' allowing deviation from targets in specified exceptional circumstances, such as national security or severe economic distress.
Why it matters for UPSC
The FRBM Act's purpose and its escape clause are commonly tested in the context of fiscal policy.
Practise related UPSC PYQs
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Practise PYQs →Frequently asked questions
What does the FRBM Act aim to do?
Institutionalise fiscal discipline by setting targets for the government's deficits and debt.
What is the FRBM escape clause?
A provision allowing the government to deviate from fiscal targets in specified exceptional situations.