Tamil Nadu follows the Fiscal Responsibility and Budget Management (FRBM) Act. The FRBM Act is a legislation that was enacted in 2003 to ensure fiscal discipline and transparency in the management of public finances. The Act sets out a framework for the preparation and execution of the budget, and it also establishes a Fiscal Responsibility Council to monitor the implementation of the Act.
The FRBM Act has been successful in bringing down the fiscal deficit and the debt burden of the central government. However, there have been some concerns about the impact of the Act on social spending. Some critics have argued that the Act has led to a reduction in social spending, as the government has been forced to cut back on non-essential expenditure in order to meet the fiscal deficit targets.
Despite these concerns, the FRBM Act has been a positive step towards ensuring fiscal discipline and transparency in the management of public finances. The Act has helped to improve the credibility of the government’s fiscal policy, and it has also made it easier for investors to assess the government’s financial position.
Here is a brief explanation of each option:
- Fiscal Responsibility and Budget Management (FRBM) Act: The FRBM Act is a legislation that was enacted in 2003 to ensure fiscal discipline and transparency in the management of public finances. The Act sets out a framework for the preparation and execution of the budget, and it also establishes a Fiscal Responsibility Council to monitor the implementation of the Act.
- Zero-Based Budgeting: Zero-based budgeting is a budgeting method that requires all expenses to be justified each year, as if the program or activity were starting from scratch. This is in contrast to traditional incremental budgeting, which only requires justification for changes from the previous year’s budget.
- Performance Budgeting: Performance budgeting is a budgeting method that focuses on the results of government programs, rather than the inputs or activities that are used to produce those results. This type of budgeting is designed to improve the efficiency and effectiveness of government spending.
- Traditional Budgeting: Traditional budgeting is a budgeting method that focuses on the inputs or activities that are used to produce government programs. This type of budgeting is often referred to as line-item budgeting, because it focuses on the individual line items in the budget.