When was the FRBM Act enacted? Who introduced it in India?

The FRBM Bill was introduced by the then finance minister, Yashwant Sinha, in 2000. The Bill, approved by the Union Cabinet in 2003, became effective from July 5, 2004.

What are the objectives of the FRBM Act?

Key features of the FRBM Act

The FRBM Act made it mandatory for the government to place the following along with the Union Budget documents in Parliament annually:

1Medium Term Fiscal Policy Statement

2. Macroeconomic Framework Statement

3. Fiscal Policy Strategy Statement

The FRBM Act proposed that revenue deficit, fiscal deficit, tax revenue and the total outstanding liabilities be projected as a percentage of GDP in the medium-term fiscal policy statement.

Budget 2020-21:

The fiscal deficit is at 3.5% in FY21 (2020-21) and at 3.8% for FY20 (2019-20).

FRBM Act exemptions

On grounds of national security, calamity, etc, the set targets of fiscal deficits and revenue could be exceeded.

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Why fiscal stimulus is necessary:


What is needed: 

The government can amend the FRBM act to allow for an emergency.

Greater expenditure is required in four buckets,

  1. Relief
  2. Medical response
  3. Aggregate demand stimulus
  4. Ramping up the public health infrastructure.  

This pandemic is an opportunity to undertake structural reforms.

Two areas,  stand out.

  1. Manufacturing:
  2. Many countries turn inward and many global manufacturing centers seek to move from China.
  3. Hence, India must cut red tape, reform its key production factors, and encourage enterprises that can provide mass employment.
  4. New ways of doing business — including mass manufacturing — will have to be found in line with social distancing  

Source:” Hindustan Times“.


How important is to increase the fiscal stimulus to revive the economy now? What are the impediments against it?