Explanation:

About FRBM:

The FRBM rule set a target reduction of fiscal deficit to 3% of the GDP by 2008-09. This will be realized with an annual reduction target of 0.3% of GDP per year by the Central government. Similarly, revenue deficit has to be reduced by 0.5% of the GDP per year with complete elimination by 2008-09. Later, the target dates were reset and budget 2016-17 aims to realise the 3% fiscal deficit target by March 2018.

The Act gives slight flexibility to the government regarding the realisation of the target as well. It gives the responsibility to the government to adhere to these targets. The Finance Minister has to explain the reasons and suggest corrective actions to be taken, in case of breach. Following are the provisions of the Act in detail.

The government has to take appropriate measures to reduce the fiscal deficit and revenue deficit so as to eliminate revenue deficit by 2008-09 and thereafter, sizable revenue surplus has to be created.

Setting annual targets for reduction of fiscal deficit and revenue deficit, contingent liabilities and total liabilities.

The government shall end its borrowing from the RBI except for temporary advances.

The RBI not to subscribe to the primary issues of the central government securities after 2006.

The revenue deficit and fiscal deficit may exceed the targets specified in the rules only on grounds of national security, calamity etc.