Fiscal Deficit and FRBM Act Objectives Definition of Fiscal Deficit: A fiscal deficit occurs when a country's government spends more money than it takes...
Fiscal Deficit and FRBM Act Objectives
Definition of Fiscal Deficit:
A fiscal deficit occurs when a country's government spends more money than it takes in through taxes.
FRBM Act Objectives:
To ensure fiscal sustainability and prevent a deficit.
To achieve the government's fiscal deficit target, which is typically set at a predetermined level (e.g., 3% of GDP).
To achieve the government's fiscal deficit target through a combination of measures, including:
Increasing taxes
Reducing spending
Increasing both taxes and spending
To achieve a balanced budget over a period of time.
Examples:
A country with a high fiscal deficit may be experiencing an economic recession or experiencing a decline in tax revenue due to a decline in economic activity.
To address a fiscal deficit, the government may increase taxes or reduce spending, or both.
In the FRBM Act, the government sets a fiscal deficit target and then measures its progress towards achieving that target.
Overall, the FRBM Act's objectives are to ensure a sustainable fiscal position, achieve the government's fiscal deficit target, and achieve a balanced budget.