The first FRBM (Fiscal Responsibility and Budget Management) Act for the Union Government was enacted in 2003 under Article 292 of the Constitution (read with Article 283). Article 293 stipulates the restriction on the power of State Government to borrow.
The Union Government appointed the FRBM review Committee (Under the Chairmanship of Mr.N.K.Singh), which submitted a four Volume Report in January 2017.
As the review Committee notes, inherent in any FRBM Rules, there is a need for two sets of trade-offs. First,flexibility in implementation should be traded of against the fiscal anchor under the FRBM Rules. The second trade off concerns balancing flexibility with simplicity.
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Dr. Mukul G Asher is a Professorial Fellow at the Lee Kuan Yew School of Public Policy at the National University of Singapore. This article was published in MyIndMakers on 9th August 2017.