The FRBM Act, 2003, is the central law that mandates fiscal discipline by setting targets to limit the government's fiscal deficit and debt and by requiring greater budget transparency.
- Enacted in 2003 and brought into force in 2004; it aimed to reduce the fiscal deficit and eliminate the revenue deficit over time.
- It requires the government to lay statements before Parliament with the Budget (such as the Medium-Term Fiscal Policy Statement and the Macro-Economic Framework Statement).
- The N. K. Singh Committee (FRBM Review Committee, reported 2017) recommended a debt-to-GDP anchor (around 60 percent general government, 40 percent Centre) and an operational fiscal-deficit target; verify the latest amended targets and outturn.
- The Act allows an "escape clause" to deviate from targets in specified situations such as national security, war, calamity, or a sharp output collapse; it was invoked around the pandemic period.
- It links directly to concept fiscal deficit and the wider budget framework.
The year (2003), the purpose (fiscal discipline), the escape clause, and the N. K. Singh Committee debt anchor are standard fiscal-policy facts.
The FRBM Act caps the deficit but its numerical targets have been revised and relaxed repeatedly; do not memorise an old fixed 3 percent figure as permanent (verify the latest).
2003 law mandating fiscal discipline and deficit targets; escape clause for emergencies; N. K. Singh Committee proposed a debt-to-GDP anchor.