Main objectives
- ensure inter-generational equity
- long term macroeconomic stability
Achieved broadly by
- achieving sufficient revenue surplus
- removing fiscal obstacles to monetary policy
- effective debt management by limiting deficits and borrowing
Important Features of FRBM Act 2003
Fiscal Targets
- Central government shall limit fiscal deficit upto 3% of GDP by 31 March 2021
- gov dept does not exceed 60% of GDP by 2024-25
- no additional guarantees wrt any loan on security of CFI in excess of 0.5% GDP
- ensure first 2 fiscal targets are exceeded after stipulated target dates
Annual Targets
- CG shall prescribe annual targets for reduction of fiscal deficit
Deviation
- any deviation shall not exceed 0.5% GDP in a year
RBI Borrowing
- CG shall not borrow from RBI except when meeting temporary excess cash disbursements over cash receipts