FRBM Act: Fiscal Prudence vs. Contingent Compulsions

The Fiscal Responsibility and Budget Management (FRBM) Act aims to ensure fiscal prudence by limiting deficits and debt levels. Balancing this with contingent compulsions such as economic crises and developmental needs poses significant challenges for policymakers.

Key Features of FRBM Act

Fiscal Targets

Sets specific targets to reduce fiscal and revenue deficits over a stipulated period.

Medium-Term Fiscal Policy

Emphasizes a medium-term fiscal policy framework outlining strategies and targets for five years.

Binding Nature

The government is legally obligated to adhere to the fiscal targets set by the act.

Fiscal Responsibility Statements

Requires central and state governments to publish fiscal responsibility statements detailing strategies to achieve ....

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