{"id":266200,"date":"2023-10-25T19:21:04","date_gmt":"2023-10-25T13:51:04","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=266200"},"modified":"2023-10-25T19:21:04","modified_gmt":"2023-10-25T13:51:04","slug":"on-frbm-act-either-repeal-or-revise-the-countrys-fiscal-law","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/on-frbm-act-either-repeal-or-revise-the-countrys-fiscal-law\/","title":{"rendered":"On FRBM Act – Either repeal or revise the country’s fiscal law"},"content":{"rendered":"\n

Source:<\/strong> The post is based on the article \u201cEither repeal or revise the country’s fiscal law<\/strong>\u201d published in \u201cLive mint\u201d<\/strong> on 25th October 2023.<\/p>\n

UPSC Syllabus:<\/strong> GS3: Economy- Fiscal policy<\/p>\n

News:<\/strong> The article discusses India’s fiscal position and its deviation from the Fiscal Responsibility and Budget Management (FRBM) Act’s 3% deficit cap. Despite exceeding this limit, the economy hasn’t faced severe inflation or high lending rates post-COVID. The article suggests reconsidering the FRBM Act’s relevance and possibly adjusting the government’s spending approach.<\/p>\n

Write about FRBM Act?<\/strong><\/h2>\n

FRBMA stands for the Fiscal Responsibility and Budget Management Act enacted in 2003, aims to promote fiscal discipline, transparency, and accountability in the management of the India\u2019s finances.<\/p>\n

Fiscal Responsibility and Budget Management Act, 2003 is regulated by the Department of Economic Affairs, Ministry of Finance.<\/p>\n

Fiscal Responsibility and Budget Management Act ,2003 ensures intergenerational equity in fiscal management and long-term macro-economic stability by reducing fiscal deficit. It further ensures effective conduct of monetary policy and prudential debt management consistent with fiscal sustainability.<\/p>\n

Read for more details:<\/strong> FRBM Act<\/a><\/p>\n

What is the current fiscal position of India?<\/strong><\/h2>\n

Fiscal Status:<\/strong> India’s fiscal position is termed ‘solid’ by the Union finance ministry.<\/p>\n

Revenue and Expenditure:<\/strong> There has been consistent revenue growth, and the Centre has prudently rationalized its spending.<\/p>\n

Deficit Target:<\/strong> The goal is to reach a 5.9% deficit for the fiscal year 2023-24.<\/p>\n

Comparison to FRBM Act:<\/strong> This 5.9% deficit stands out as it’s nearly twice the 3% cap mandated by the Fiscal Responsibility and Budget Management (FRBM) Act of 2003.<\/p>\n

Economic Repercussions:<\/strong> Post-COVID, even with such deficits, neither high inflation nor soaring lending rates have been observed.<\/p>\n

Economic Recovery:<\/strong> There’s a robust recovery in commercial activity, and consumer demand is bouncing back.<\/p>\n

Central Bank’s Role:<\/strong> The central bank has played a pivotal role in ensuring stability, monitoring monetary conditions amidst the increased deficits, and fostering an environment for economic recovery.<\/p>\n

What is the relevance of the FRBM Act in the present situation?<\/strong><\/h2>\n

FRBM Act’s Original Intent:<\/strong> The FRBM Act of 2003 set a 3% deficit cap for India.<\/p>\n

Current Scenario:<\/strong> India aims for a 5.9% deficit in the fiscal year 2023-24, surpassing the FRBM’s stipulation.<\/p>\n

Act’s Modern Relevance:<\/strong> Many consider the 3% cap outdated in the current economic environment.<\/p>\n

Provisions for Crises:<\/strong> The Act has flexibility for extraordinary situations, like the COVID pandemic.<\/p>\n

Government’s View:<\/strong> The government’s deviation suggests they might see the Act more as a guideline than a strict rule.<\/p>\n

Need for Policy Flexibility:<\/strong> Economic experts believe fiscal policy should have room to adjust, especially when state intervention can stabilize the economy.<\/p>\n

Post-COVID Economic Impact:<\/strong> Despite exceeding the FRBM’s limits after COVID, India hasn’t experienced high inflation or lending rates, raising questions about the Act’s strictness in today’s context.<\/p>\n

Questions to practice:<\/strong><\/p>\n

Evaluate the effectiveness of the FRBM Act in the context of India’s current ‘solid’ fiscal scenario and its deficit target for 2023-24.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article \u201cEither repeal or revise the country’s fiscal law\u201d published in \u201cLive mint\u201d on 25th October 2023. UPSC Syllabus: GS3: Economy- Fiscal policy News: The article discusses India’s fiscal position and its deviation from the Fiscal Responsibility and Budget Management (FRBM) Act’s 3% deficit cap. Despite exceeding this… Continue reading On FRBM Act – Either repeal or revise the country’s fiscal law<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,8184,10506],"class_list":["post-266200","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-indian-economy","tag-livemint","entry"],"jetpack_featured_media_url":"","views":{"total":66,"cached_at":1698382148,"cached_date":1698468353},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/266200","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=266200"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/266200\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=266200"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=266200"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=266200"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}