Under the FRBMA, the central government must ensure inter-generational equity and long-term macro-economic stability by:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → achieving sufficient revenue surplus, removing fiscal obstacles to monetary policy and managing debt well
The FRBMA binds the government to a prudent fiscal policy. Its aims are a revenue surplus, no fiscal obstacles to monetary policy, and good debt management by limiting deficits and borrowing.
The Act limits borrowing from the RBI and aims to remove the revenue deficit, so the other choices go against it.
NCERT (2026-27): “Box 5.2: Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) … The enactment of the FRBMA, in August 2003, marked a turning point in fiscal reforms, binding the government through an institutional framework to pursue a prudent fiscal policy. The central government must ensure inter-generational equity and long-term macro-economic stability by achieving sufficient revenue surplus, removing fiscal obstacles to monetary policy and effective debt management by limiting deficits and borrowing. The rules under the Act were notified with effect from July, 2004.” |