Budget FAQs: What is FRBM Act?

Budget FAQs: What is Fiscal Responsibility and Budget Management Act?

A committee to review the FRBM Act was set up under the economist and former Indian Administrative Service officer NK Singh.

Finance Minister Nirmala Sitharaman is set to present her second Union Budget on February 1, 2020. This is the second budget that Sitharaman will be presenting under the Prime Minister Narendra Modi's government. 

As the buzz around the upcoming budget is rising, DH explains what an FRMB Act is.

The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in 2003 which set targets for the government to reduce fiscal deficits. 

Also Read: Budget 2020: What is Foreign Direct Investment?

After the government failed to adhere to the targets even after multiple attempts, claiming that the goals were very inflexible, a committee to review the the Act was set up under the economist and former Indian Administrative Service officer NK Singh.

Also Read: Budget FAQ: What is outcome budget?

Citing the NK Singh committee report, the government was pulled up by the Comptroller and Auditor General of India (CAG) during Arun Jaitley's tenure, as the fiscal deficit target of 3% of the GDP and chose a target of 3.2%.

CAG said that borrowing was higher than the targets under the Fiscal Responsibility and Budget Management Act, maybe by as much as 2 percentage points of GDP, in the current fiscal year.

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