Monday, February 16, 2015

What is FRBM?

 

FRBM, or the Fiscal Responsibility and Budget Management Act, is a law to force financial discipline on the government with the main objective of reducing fiscal deficit through better management of government funds. The main target within the broader parameters of the act was to reduce revenue deficit. It was first introduced in 2000, passed by Parliament in 2003 and enacted the next year with the initial target of reducing fiscal deficit to 3% of the GDP by 2008. However, due to the global financial crisis in 2008, the target was postponed. And over the last few years, the postponement of target happened several times. Going by FRBM, the government now has a fiscal deficit target of 3.6% for the next financial year (2015-16).

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