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Definition: Introduced by the then Finance Minister, Yashwant Sinha, in 2000, FRBM aims to bring financial discipline and decrease fiscal deficit. It confirms responsible fiscal management and long-term financial stability.
The Bill, approved by the Union Cabinet in 2003, came into effect on July 5, 2004. Under the FRBM Act, the government must submit the following documents to Parliament each year along with the Union Budget: Medium Term Fiscal Policy Statement, Macroeconomic Framework Statement and the Fiscal Policy Strategy Statement.
FRBM is like a rulebook for India’s finances. It keeps government spending and borrowing in check to maintain financial discipline, better manage public funds, and shrink deficits. Other objectives include creating a transparent fiscal management system, ensuring fair debt distribution over the years, and maintaining long-term fiscal stability. Despite the act being around for years, the targets are still a work in progress, leading to many updates and changes to the FRBM Act.
FRBM is about being responsible with finances to build a stronger and more prosperous country for future generations. It helps ensure fair management of money across generations, keeps the economy stable, coordinates fiscal and monetary policies, and promotes transparency in financial operations.
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