Economics • Indian EconomyMedium
In the context of Indian public finance, what does the 'Fiscal Responsibility and Budget Management (FRBM) Act' primarily mandate for the central government?
A. Elimination of all subsidies within a statutory timeframe of three consecutive fiscal years
B. Legal targets to institutionalize fiscal discipline, reduce fiscal deficit, and eliminate revenue deficit✓ Correct Answer
C. Transfer of all direct tax collection powers directly to elected local panchayat institutions
D. Mandatory Parliamentary approval for all foreign institutional capital inflows exceeding a threshold
💡 Solution & Explanation
The Fiscal Responsibility and Budget Management Act enacted in 2003 places legal targets on the central government to institutionalize financial discipline, reduce fiscal deficits, and eliminate revenue deficits over successive fiscal years. It does not mandate the removal of all subsidies or transfer tax powers to local bodies. Public finance regulations are core topics in Indian economic governance.
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