Further, the FRBM Act ignores the possible inverse link between fiscal deficit (fiscal expansion) and bank credit (monetary expansion). We need a new … Continue reading FRBM Act Hence in 2000, they introduced a bill to bring responsibility and discipline in matters of expenditure and debt. Read about NK Singh’s Fiscal Deficit Committee in the linked article. Revenue Deficit Target – revenue deficit should be completely eliminated by March 31, 2015. It is a legal step to ensure fiscal discipline and fiscal consolidation in India. The objective of the MTEF is to provide a closer integration between budget and the FRBM Statements. What exactly is FRBM? It is considered as one of the major legal steps taken in the direction of fiscal consolidation in India. Finance Minister deferred the fiscal deficit target of 3.2% due to several factors such as low GST collections, spike in oil prices and pressure to spend more. The Fiscal Responsibility and Budget Management Bill (FRBM Bill) was introduced in India by the then Finance Minister of India, Mr.Yashwant Sinha in December 2000. Fiscal deficit is when the government’s expenditure outgrows its revenues. In 2019-20, total expenditure rises by 13.30% over 2018-19 RE. By 2003, the continuous government borrowing and the resultant debt had severely impacted the health of the Indian economy. In 2012 and 2015, notable amendments were made, resulting in relaxation of target realisation year. This bill was passed by the Indian Parliament in 2003 and came to be known as the Fiscal Responsibility and Budget Management Act. Alex Andrews George is a mentor, author, and entrepreneur. 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