QUESTION 2
GS3
10 marks
What were the reasons for introduction of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003? Discuss critically its salient features and their effectiveness.
WRITE IN
7 min
200 words
What the examiner wants
Explain why the FRBM Act came, its main features and how effective it has been.
Discuss criticallyAnswer exactly what the question asks.
Demand-wise check
- 1Reasons: high fiscal deficit after Fifth Pay Commission, rising debt and interest burden, revenue deficit funding consumption≈35 words
- 2Features: fiscal deficit to 3% of GDP, revenue deficit to zero (by 2008-09 per Rules), three fiscal policy statements with the Budget, RBI barred from primary market purchase of government securities from 2006, escape clause≈35 words
- 3Effectiveness: deficit fell to about 2.5% in 2007-08; suspended after 2008 crisis; targets repeatedly shifted; off-budget borrowing≈35 words
- 4Reforms: 2012 amendment (effective revenue deficit), N.K. Singh Committee debt anchor≈35 words
Open in about 30 words and close in about 30.
Answer plan
Context of fiscal stressFeaturesRecordWeaknessesReformsConclusion
Where marks usually go
- Listing features without assessing results
- Missing the RBI primary market ban, a key structural feature
Draw this
- Line graph of Centre's fiscal deficit (% GDP) 2003-04 to 2010-11
Value addition
- CommitteeN.K. Singh FRBM Review Committee (2017) proposed a general government debt anchor of 60% of GDP (Centre 40%, states 20%).FRBM Review Committee, 2017
- LawFRBM amendment (2012) introduced 'effective revenue deficit' and a Medium-Term Expenditure Framework statement.Finance Act, 2012
Mapped topper copies
Reviewed public-source references related to this PYQ. Same-syllabus references are labelled separately.
- Mayank Purohit · AIR 33 · Page 13 ↗Same syllabus reference
- Aniket Ranjan · AIR 48 · Page 26 ↗Same syllabus reference
- Shakti Dubey · AIR 1 · Page 23 ↗Same syllabus reference
- Mayank Purohit · AIR 33 · Page 15 ↗Same syllabus reference
Links open original public sources. MainsBuddy does not host these answer sheets.
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