In India, the Fiscal Responsibility and Budget Management Act-2003 requires the reduction in fiscal deficit by ____ of GDP every year.
Show answer & explanation
Correct answer: A
Explanation
Correct Answer:
Option 1 (0.3%)
Explanation:
The Fiscal Responsibility and Budget Management (FRBM) Act, 2003, mandated the central government to reduce the fiscal deficit by 0.3% of gross domestic product (GDP) every year. The Act's primary objective was to discipline government spending, reduce the fiscal deficit, and ensure long-term debt sustainability.
Additional Facts:
Objective of the FRBM Act: Initially, the Act aimed to reduce the fiscal deficit to 3% of GDP and eliminate the revenue deficit completely by March 2009.
Revisions: These targets have been revised from time to time based on economic conditions (such as the recommendations of the N.K. Singh Committee of 2016).
Revenue Deficit: The Act also provided for a reduction of the revenue deficit by 0.5% per year.
Possible questions for the upcoming exam:
Who headed the committee formed in 2016 to review the FRBM Act? (Answer: N.K. Singh)
What does the fiscal deficit represent? (Answer: The government's total borrowing requirement)
Under which article is the budget presented in India? (Answer: Article 112 - Annual Financial Statement)