The Fiscal Responsibility and Budget Management (FRBM) Act, enacted in 2003 by Parliament of India, aims to ensure fiscal discipline by setting targets for deficits, debt, and transparency in budgetary processes.

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• FRBM Act introduced to control rising fiscal deficit, revenue deficit, and debt levels affecting India’s macroeconomic stability

• Act mandates medium-term fiscal planning with transparent reporting of deficit, liabilities, and revenue indicators

• Initial targets fixed fiscal deficit at 3% of GDP and elimination of revenue deficit within a specified timeframe

• Amendments in 2012 and 2015 relaxed timelines and introduced Effective Revenue Deficit concept

• NK Singh Committee recommended debt-to-GDP ratio as anchor with 60% overall target for Centre and States

• Act includes escape clause allowing temporary deviation during economic shocks, war, or national calamities

• FRBM framework supports monetary policy effectiveness by limiting excessive government borrowing