Economics • Indian EconomyMedium
What does the 'Fiscal Responsibility and Budget Management (FRBM) Act, 2003' mandate for the Indian economy?
A. Institutionalizing financial discipline, reducing fiscal deficit, and eliminating revenue deficit to achieve macroeconomic stability.✓ Correct Answer
B. Mandating zero corporate tax rates for manufacturing startups.
C. Fixing the exchange rate of the Indian Rupee against a basket of foreign currencies.
D. Ensuring 100% financial inclusion through mandatory zero-balance bank accounts.
💡 Solution & Explanation
The Fiscal Responsibility and Budget Management Act of 2003 was enacted to institutionalize fiscal discipline, reduce the fiscal deficit, and eliminate the revenue deficit, thereby ensuring long-term macroeconomic stability in India. It binds the central government to specific annual reduction targets for key deficit indicators. Alternative choices mentioning zero corporate tax or fixed exchange rates do not align with the statutory mandates of the Act.
More Economics Indian Economy questions
- How does the Production Linked Incentive (PLI) scheme seek to transform the manufacturing sector in India?
- Which body is responsible for recommending the formula for the vertical and horizontal devolution of tax…
- Examine the fiscal mechanism of 'Revenue Deficit' in India's public finance structure. Which of the following…
- In the formulation of the Arunachal Pradesh State Budget, what structural economic tension arises between…
- Which organization in India is responsible for compiling and publishing the official national income…