The Fiscal Responsibility and Budget Management FRBM Act aimed for 1 eliminating both revenue defici...........

Economic Affairs Public Finance and Debt Management

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The Fiscal Responsibility and Budget Management (FRBM) Act aimed for

1. eliminating both revenue deficit and fiscal deficit

2. giving flexibility to RBI for inflation management

Which of the statements given above is/are correct ?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

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Explanation:

FRBM Act had the objective of ensuring prudence in fiscal management by eliminating revenue deficit, REDUCING ( and not eliminating ) fiscal deficit, establishing improved debt management and improving transparency in a medium term framework with quantitative targets to be adhered by the state with regard to deficit measures and debt management. The act was also expected to give necessary flexibility to Reserve Bank of India(RBI) for managing inflation in India.