The Fiscal Responsibility and Budget Management Act, 2003 aims to brin

The Fiscal Responsibility and Budget Management Act, 2003 aims to bring down the fiscal deficit to a certain percentage of GDP. What is the target fiscal deficit as per the Act?

3.5%

4.5%

5.5%

6.5%

Answer is Right!

Answer is Wrong!

This question was previously asked in

UPSC Combined Section Officer – 2019-20

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The most plausible correct option, considering recent fiscal consolidation roadmaps under the FRBM framework, is B) 4.5%.

The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 originally targeted a fiscal deficit of 3% of GDP by March 31, 2008. This target and timeline have been revised multiple times through amendments and policy statements based on prevailing economic conditions. While the original act aimed for 3%, the options provided do not include 3%. Among the given options, 4.5% is a stated medium-term fiscal deficit target (specifically for FY 2025-26) as part of the current fiscal consolidation path outlined by the government under the FRBM framework.

The FRBM Act mandates fiscal discipline and aims to eliminate revenue deficit and reduce fiscal deficit. The Act has provisions allowing deviation from targets under certain circumstances. The NK Singh Committee on FRBM Review had also recommended a target of 3% fiscal deficit by FY2020-21, with flexibility for deviations. The target of 4.5% by FY 2025-26 is a recent target announced in the Union Budget, demonstrating the government’s commitment to fiscal consolidation within the FRBM framework.

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