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What is the significance of FRBM with respect to Indian economy? The requirement of ‘Medium Term Expenditure Framework Statement’ was also added via amendment in FRBMA. Total Debt to be reduced to 9% of the GDP (a target increased from the original 6% requirement in 2004–05). Required fields are marked *, Fiscal deficit pegged at 3.4% of GDP for 2019-20. The Committee proposed a draft Debt Management and Fiscal Responsibility Bill, 2017 to replace the Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act). to aim for fiscal stability for India in the long run. The targets were breached time and again. Specific details were updated in sub-section (2) of Section 4. - Poonam Dalal, ClearIAS Online Student. 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Many economists then warned the government that this condition is not sustainable. The FRBM is an act of the parliament that set targets for the Government of India to establish financial discipline, improve the management of public funds, strengthen fiscal prudence and reduce its fiscal deficits. to introduce a more equitable and manageable distribution of the country’s debts over the years. In India, the borrowing levels were very high in the 1990s and 2000s. In 2019-20, total expenditure rises by 13.30% over 2018-19 RE. The FRBM Act was passed by the Parliament of India in 2003 to reduce Fiscal Deficit. Fiscal Deficit to be brought down to at least 3% of GDP by 31st of March 2008. Revenue Deficit Target – revenue deficit should be reduced to 0.8% of GDP by March 31, 2023. A minimum annual reduction of 0.5% of GDP. I bought it and found it to be the best available online." FRBM Act – Guidelines, Targets, and Escape Clause. The FRBM Act 2003 in its amended form was passed by the government to bring fiscal discipline and to implement a prudent fiscal policy. A trusted mentor and pioneer in online training, Alex's guidance, strategies, study-materials, and mock-exams have helped thousands of aspirants to become IAS, IPS, and IFS officers. The FRBM Review Committee headed by former Revenue Secretary, NK Singh was appointed by the government to review the implementation of FRBM. The global financial crisis (2007-08) led the government to infuse resources in the economy as the fiscal stimulus in 2008. Revenue deficit to be eliminated by the 31st of March 2009. The provisions provided in the initial versions of the bill were too drastic. For details check the details of the budget documents. In 2020, Finance Minister, Nirmala Sitharaman used the escape clause provided under the FRBM Act to allow the relaxation of the target. They advised legal steps to prevent India to fall into a debt-trap. 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