FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT AND ITS IMPACT ON THE STATES
PUBLIC FINANCE POLICY REPORT
FISCAL RESPONSIBILITY AND BUDGET
MANAGEMENT ACT AND ITS IMPACT ON
THE STATES
BY:
NIPUN KHEMKA(10HS20028)
MOHIT KHETPAL (10MA20030)
Introduction:
Since its external crisis of the early nineties, India has witnessed a turnaround on most indicators of macro-economic performance. The process of economic reform, including widespread liberalization and reduction in protectionism, launched in 1991, and steadily pursued thereafter has yielded positive results by eliminating some longstanding structural rigidities, and created potential for higher growth. Over the last decade or so India has made transition from an onerous trade regime to a market-friendly system encompassing both trade and current payments. Despite a decade of economic reform, there is still persistence of huge fiscal and revenue deficit thereby widening the gap between revenue and expenditure, forcing the political thinkers to enact a law for fiscal correction and ultimately during
2003-04, the Fiscal Responsibility and Budget Management Act was enacted and put into operation. Under this law, both the Centre and States were to wipe out revenue deficit and cut fiscal deficit to 3% of GDP by 2008-09.
The FRBM Act was enacted by Parliament in 2003 to bring in the much needed fiscal discipline. It received the President’s assent in August the same year. The United Progressive Alliance (UPA) government notified the
FRBM Rules in July 2004. As Parliament is the supreme legislative body, the Act and the Rules will bind the present and also the future Finance
Ministers and Governments.
FRBM Act 2003
• FRBM Act 2003 came into force w.e.f. 5 July 2004.
• The Act required the Central Government to eliminate revenue deficit by March 2009 and to reduce fiscal deficit to 3% of GDP by March
2008.
• Under section 7 of the Act, the Central Government is required to lay before both Houses of Parliament Medium Term Fiscal Policy
Statement, Fiscal
FISCAL RESPONSIBILITY AND BUDGET
MANAGEMENT ACT AND ITS IMPACT ON
THE STATES
BY:
NIPUN KHEMKA(10HS20028)
MOHIT KHETPAL (10MA20030)
Introduction:
Since its external crisis of the early nineties, India has witnessed a turnaround on most indicators of macro-economic performance. The process of economic reform, including widespread liberalization and reduction in protectionism, launched in 1991, and steadily pursued thereafter has yielded positive results by eliminating some longstanding structural rigidities, and created potential for higher growth. Over the last decade or so India has made transition from an onerous trade regime to a market-friendly system encompassing both trade and current payments. Despite a decade of economic reform, there is still persistence of huge fiscal and revenue deficit thereby widening the gap between revenue and expenditure, forcing the political thinkers to enact a law for fiscal correction and ultimately during
2003-04, the Fiscal Responsibility and Budget Management Act was enacted and put into operation. Under this law, both the Centre and States were to wipe out revenue deficit and cut fiscal deficit to 3% of GDP by 2008-09.
The FRBM Act was enacted by Parliament in 2003 to bring in the much needed fiscal discipline. It received the President’s assent in August the same year. The United Progressive Alliance (UPA) government notified the
FRBM Rules in July 2004. As Parliament is the supreme legislative body, the Act and the Rules will bind the present and also the future Finance
Ministers and Governments.
FRBM Act 2003
• FRBM Act 2003 came into force w.e.f. 5 July 2004.
• The Act required the Central Government to eliminate revenue deficit by March 2009 and to reduce fiscal deficit to 3% of GDP by March
2008.
• Under section 7 of the Act, the Central Government is required to lay before both Houses of Parliament Medium Term Fiscal Policy
Statement, Fiscal