Economics • Indian EconomyHard
Examine the recommendations of the 'FRBM Review Committee' chaired by N.K. Singh regarding fiscal management targets for the Indian economy. What key fiscal anchors were proposed?
A. A target debt-to-GDP ratio of 60 percent combined with a fiscal deficit target of 3 percent of GDP for the central government.✓ Correct Answer
B. The complete elimination of all capital expenditures financed through external commercial borrowings.
C. A uniform tax-to-GDP ratio of 25 percent applicable equally across all state governments.
D. The abolition of the Consolidated Fund of India in favor of decentralized state treasuries.
💡 Solution & Explanation
The FRBM Review Committee chaired by N.K. Singh recommended adopting a debt-to-GDP ratio of 60 percent, comprising 40 percent for the central government and 20 percent for state governments, along with a fiscal deficit target of 3 percent of GDP. These targets were framed to ensure macro-financial stability and sustainable public debt levels over the medium term. The original Fiscal Responsibility and Budget Management Act was enacted in 2003.
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