WBCS.LIVE practice question

What is the main objective of the 'Fiscal Responsibility and Budget Management' (FRBM) Act, 2003?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. To increase the tax-to-GDP ratio.
  2. To eliminate the current account deficit.
  3. To ensure fiscal discipline and reduce the fiscal deficit.
  4. To privatize all public sector undertakings.

Correct answer and explanation

Correct answer: To ensure fiscal discipline and reduce the fiscal deficit.

Explanation: āœ… Correct Answer: C) To ensure fiscal discipline and reduce the fiscal deficit. šŸ“š Explanation: The FRBM Act was enacted to institutionalize financial discipline and reduce India's fiscal deficit to a manageable level. It set targets for the government to eliminate the revenue deficit and reduce the fiscal deficit to 3% of GDP. The act also mandates the government to place three policy statements annually before the Parliament.