UPSC Prelims 2020 · Question 36 of 100
UPSC Prelims 2020 question on Budget Documents FRBM
- ExamUPSC CSE
- Year2020
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicPublic Finance
- DifficultyEasy
- TypeDirect
Along with the Budget, the Finance Minister also places other documents before the Parliament which include "The Macro Economic Framework Statement". The aforesaid document is presented because this is mandated by
Show answer
Answer: D. Provisions of the Fiscal Responsibility and Budget Management Act, 2003
Verdict
Correct answer: Provisions of the FRBM Act, 2003 → Option (d).
Analysis
Fiscal Responsibility and Budget Management (FRBM) became an Act in 2003. The objective of the Act is to ensure inter-generational equity in fiscal management, long run macroeconomic stability, better coordination between fiscal and monetary policy, and transparency in fiscal operation of the Government.
The FRBM Act requires presentation of the following documents before the Parliament along with the Budget:
- Medium-Term Expenditure Framework Statement (MTEF)
- Medium-Term Fiscal Policy Statement
- Fiscal Policy Strategy Statement
- Macroeconomic Framework Statement
Statement by statement
Option (a) – INCORRECT: It is not based on parliamentary convention but a statutory mandate.
Option (b) – INCORRECT: Article 112 mandates the Annual Financial Statement; Article 110(1) defines a Money Bill — neither mandates the Macro Economic Framework Statement.
Option (c) – INCORRECT: Article 113 deals with parliamentary procedure on estimates, not on this document.
Option (d) – CORRECT: The FRBM Act, 2003 mandates the Macroeconomic Framework Statement.
Extra UPSC info
FRBM Act original targets — reduce fiscal deficit to 3% of GDP and eliminate revenue deficit. The N.K. Singh Committee (2017) recommended a fiscal deficit target of 2.5% by FY23 and debt-to-GDP target of 60%.