FRBM full form

What is the full form of FRBM?

FRBM stands for Fiscal Responsibility and Budget Management. This bill was first Introduced in the Parliament of India in 2000. It was introduced by Atal Bihari Vajpayee government and this bill was introduced for providing legal banking to the fiscal discipline to be institutionalised. And later on, the FRBM act was also passed in 2003. This act was passed to establish financial discipline, reduce the fiscal deficit, and the improvement of public funds.

This Story also Contains

1. What is the full form of FRBM?
2. About Fiscal Responsibility and Budget Management(FRBM)
3. Feature of FRBM
4. Importance of FRBM

About Fiscal Responsibility and Budget Management(FRBM)

This act is a very important guiding light for the Indian government and it also guides the Reserve bank of India and the Central Bank of India. It is very helpful for the guidance of the government against large borrowing at higher interest rates which on other hand reduces the large paying outflow. FRBM also brings transparency to the monetary affair of the government and for any expenditure, the government has to explain the reason behind it which is very important for the democracy of our country so it is also helpful to make India more accountable to the people, people who voted for the government for their better future. So we can say that FRBM is an important act that makes our country more judicious and systematic. The objective of FRBM is to set targets for fiscal deficit. For example, the target for the current financial year 2021 to 2022 is 6.8% of GDP.

Feature of FRBM

Let's talk about the features of FRBM:

• FRBM forbids the Reserve Bank of India from subscribing to the primary issues of g-sec which is issued by the government of India

• FRBM also forbade the central government from any borrowing from the central bank, reverse Bank of India.

• FRBM makes it compulsory for the Central Government to answer in cases where they fail to meet the revenue and fiscal deficit target.

• FRBM also limits the quantum of guarantee that is provided by the central government in any financial year to 0.5% of GDP.

• FRBM also abolished the revenue deficit and fiscal deficit with an equivalent amount every year to completely avoid the deficit.

Importance of FRBM

1. We all know that a more fiscal deficit always leads to the accumulation of large amounts of debt borrowing and on the other hand lower level fiscal deficit helps the country to grow higher and make things more sustainable. The important point to be noted is that FRBM aims to reduce the debt borrowing of our country and make it more sustainable. So FRBM is very important for our country to improve its ranking on the global index so India becomes more preferable for a foreign investor to invest and to also reduce the unnecessary enlargement of the balance sheet and social expenditure.

2. FRBM always ensures equal benefits to all generations and if we talk about the important objective of FRBM then it is to attend the long-run stability of macroeconomic factors (macroeconomic factors are those factors that have a large impact on the country's economy for example population, income, unemployment, and Investments). But it is always observed that the government always fails to achieve its targets but we can say that FRBM has a great impact on our economic development and credit growth.