The Fiscal Responsibility and Budget Management (FRBM) Act, 2003, intends to bring transparency and accountability in the conduct of the fiscal and monetary actions of the government.
The rules 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.
The government is also required to provide the Parliament details of fiscal indicators such as fiscal, revenue and primary deficit as a percentage of GDP, tax and non-tax revenues as a percentage of GDP, and central government debt as a percentage of GDP.
