Which of the following pairs about the targets of the FRBMA is correctly matched?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Fiscal deficit – to be reduced to not more than 3 per cent of GDP
The FRBMA asks the government to bring the fiscal deficit down to not more than 3 per cent of GDP and to eliminate the revenue deficit.
Option (1) Fiscal deficit – to be reduced to not more than 3 per cent of GDP — Correct. This is the fiscal deficit target.
Option (2) Revenue deficit – to be reduced by 0.3 per cent of GDP each year — Incorrect. The yearly cut of 0.3 per cent is for the fiscal deficit. The revenue deficit is cut by 0.5 per cent.
Option (3) Revenue deficit – to be kept at 3 per cent of GDP — Incorrect. The revenue deficit is to be eliminated, followed by a revenue surplus.
Option (4) Fiscal deficit – to be reduced by 0.5 per cent of GDP each year — Incorrect. The yearly cut of 0.5 per cent is for the revenue deficit.
NCERT (2026-27): “Main Features 1. The Act mandates the central government to take appropriate measures to reduce fiscal deficit to not more than 3 percent of GDP and to eliminate the revenue deficit …” “2. It requires the reduction in fiscal deficit by 0.3 per cent of GDP each year and the revenue deficit by 0.5 per cent. …” |