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With reference to the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA), consider the following statements:
1. The outcome budget was introduced as part of the Act.
2. It provides scope for deviation from the annual fiscal deficit target under certain conditions.
3. It prohibits the central government borrowings from the RBI under all circumstances.
Which of the statements given above is/are correct?
1. The outcome budget was introduced as part of the Act.
2. It provides scope for deviation from the annual fiscal deficit target under certain conditions.
3. It prohibits the central government borrowings from the RBI under all circumstances.
Which of the statements given above is/are correct?
- a)1 and 3 only
- b)1, 2 and 3
- c)2 only
- d)None
Correct answer is option 'C'. Can you explain this answer?
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With reference to the Fiscal Responsibility and Budget Management Act,...
• The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) is an Act of the Parliament of India to institutionalize financial discipline, reduce India's fiscal deficit, improve macroeconomic management and the overall management of the public funds by moving towards a balanced budget and strengthen fiscal prudence.
• Section 3 of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 requires the Government to place three Statements of Fiscal Policy viz., the Medium-term Fiscal Policy Statement, the Fiscal Policy Strategy Statement and the Macroeconomic Framework Statement in both the Houses of Parliament along with Annual Financial Statement and Demands for Grants. This Section was amended to require the Government to lay the Fourth Statement viz., the Medium Term Expenditure Framework (MTEF) Statement in both the Houses of Parliament, immediately following the session of the Parliament in which the Budget has been presented.
• However, there was no requirement for the presentation of the Outcome Budget. It was introduced in 2005. Hence statement 1 is not correct.
• The rules under the Act set targets for the phased reduction of the fiscal deficit to acceptable levels. It requires the government to limit the fiscal deficit to 3% of the GDP by 31 March 2021 and the debt of the central government to 40% of the GDP by 2024-25, among others. The Act provides room for deviation from the annual fiscal deficit target under certain conditions. Hence statement 2 is correct.
• According to the Act, the Central Government shall not borrow from the Reserve Bank. However, the Central Government may borrow from the Reserve Bank by way of advances to meet temporary excess of cash disbursement over cash receipts during any financial year in accordance with the agreements which may be entered into by that Government with the Reserve Bank: Provided that any advances made by the Reserve Bank to meet temporary excess cash disbursement over cash receipts in any financial year shall be repayable in accordance with the provisions contained in sub-section (5) of section 17 of the Reserve Bank of India Act, 1934 (2 of 1934). Hence statement 3 is not correct.
• Section 3 of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 requires the Government to place three Statements of Fiscal Policy viz., the Medium-term Fiscal Policy Statement, the Fiscal Policy Strategy Statement and the Macroeconomic Framework Statement in both the Houses of Parliament along with Annual Financial Statement and Demands for Grants. This Section was amended to require the Government to lay the Fourth Statement viz., the Medium Term Expenditure Framework (MTEF) Statement in both the Houses of Parliament, immediately following the session of the Parliament in which the Budget has been presented.
• However, there was no requirement for the presentation of the Outcome Budget. It was introduced in 2005. Hence statement 1 is not correct.
• The rules under the Act set targets for the phased reduction of the fiscal deficit to acceptable levels. It requires the government to limit the fiscal deficit to 3% of the GDP by 31 March 2021 and the debt of the central government to 40% of the GDP by 2024-25, among others. The Act provides room for deviation from the annual fiscal deficit target under certain conditions. Hence statement 2 is correct.
• According to the Act, the Central Government shall not borrow from the Reserve Bank. However, the Central Government may borrow from the Reserve Bank by way of advances to meet temporary excess of cash disbursement over cash receipts during any financial year in accordance with the agreements which may be entered into by that Government with the Reserve Bank: Provided that any advances made by the Reserve Bank to meet temporary excess cash disbursement over cash receipts in any financial year shall be repayable in accordance with the provisions contained in sub-section (5) of section 17 of the Reserve Bank of India Act, 1934 (2 of 1934). Hence statement 3 is not correct.
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With reference to the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA), consider the following statements:1. The outcome budget was introduced as part of the Act.2. It provides scope for deviation from the annual fiscal deficit target under certain conditions.3. It prohibits the central government borrowings from the RBI under all circumstances.Which of the statements given above is/are correct?a)1 and 3 onlyb)1, 2 and 3c)2 onlyd)NoneCorrect answer is option 'C'. Can you explain this answer?
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With reference to the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA), consider the following statements:1. The outcome budget was introduced as part of the Act.2. It provides scope for deviation from the annual fiscal deficit target under certain conditions.3. It prohibits the central government borrowings from the RBI under all circumstances.Which of the statements given above is/are correct?a)1 and 3 onlyb)1, 2 and 3c)2 onlyd)NoneCorrect answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA), consider the following statements:1. The outcome budget was introduced as part of the Act.2. It provides scope for deviation from the annual fiscal deficit target under certain conditions.3. It prohibits the central government borrowings from the RBI under all circumstances.Which of the statements given above is/are correct?a)1 and 3 onlyb)1, 2 and 3c)2 onlyd)NoneCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA), consider the following statements:1. The outcome budget was introduced as part of the Act.2. It provides scope for deviation from the annual fiscal deficit target under certain conditions.3. It prohibits the central government borrowings from the RBI under all circumstances.Which of the statements given above is/are correct?a)1 and 3 onlyb)1, 2 and 3c)2 onlyd)NoneCorrect answer is option 'C'. Can you explain this answer?.
With reference to the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA), consider the following statements:1. The outcome budget was introduced as part of the Act.2. It provides scope for deviation from the annual fiscal deficit target under certain conditions.3. It prohibits the central government borrowings from the RBI under all circumstances.Which of the statements given above is/are correct?a)1 and 3 onlyb)1, 2 and 3c)2 onlyd)NoneCorrect answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA), consider the following statements:1. The outcome budget was introduced as part of the Act.2. It provides scope for deviation from the annual fiscal deficit target under certain conditions.3. It prohibits the central government borrowings from the RBI under all circumstances.Which of the statements given above is/are correct?a)1 and 3 onlyb)1, 2 and 3c)2 onlyd)NoneCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA), consider the following statements:1. The outcome budget was introduced as part of the Act.2. It provides scope for deviation from the annual fiscal deficit target under certain conditions.3. It prohibits the central government borrowings from the RBI under all circumstances.Which of the statements given above is/are correct?a)1 and 3 onlyb)1, 2 and 3c)2 onlyd)NoneCorrect answer is option 'C'. Can you explain this answer?.
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