Assertion (A): The enactment of the FRBMA in August 2003 marked a turning point in fiscal reforms in India.
Reason (R): It bound the government, through an institutional framework, to pursue a prudent fiscal policy.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Both (A) and (R) are true and (R) is the correct explanation of (A).
Assertion (A): The enactment of the FRBMA in August 2003 marked a turning point in fiscal reforms in India. — True. It brought a legal limit on deficits.
Reason (R): It bound the government, through an institutional framework, to pursue a prudent fiscal policy. — True. The Act applies to present and future governments.
Why R explains A?
Before the Act, deficit control depended on each government’s choice. The FRBMA made prudent fiscal policy a legal duty, which is what made it a turning point.
NCERT (2026-27): “Box 5.2: Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) In a multi-party parliamentary system, electoral concerns play an important role in determining expenditure policies. A legislative provision, it is argued, that is applicable to all governments – present and future – is likely to be effective in keeping deficits under control. 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. …” |