Fiscal Responsibility and Budget Management Act, 2003 (FRBM)

• The Act provides an institutional framework binding the government to pursue a Prudent Fiscal Policy. It casts the responsibility of the Central Government to ensure inter-generational equity in fiscal management.
• The Act calls for that the Central Government to take appropriate measures to reduce the fiscal deficit and there after build-up adequate revenue surplus.

• Rules to be made under the Act to specify the annual targets for reduction of fiscal deficit and revenue deficit, contingent liabilities and total liabilities.

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

• The Central Government shall not borrow from the RBI except by way of means and advances to meet temporary excess of cash disbursement over cash receipts.

• Central Government to take suitable measures to ensure greater transparency in its fiscal operations.

• Central government to lay in each financial year before both Houses of Parliament three statements:  medium term fiscal policy statement, fiscal policy strategy, and macro economic framework statement.

• Finance Minister to make a quarterly review of trends in receipts and expenditure in relation to the budget and place the review before the Parliament.

TIME TO REVISE

1.  WHAT is Appropriation Bill?

It is the bill authorizes payment and appropriation of expenses from the consolidated fund. This bill is introduced only after the general discussion on budget proposals and the completion of voting on grants. The procedure to pass the bill in parliament is likely any other Money Bill.

2.   What is Capital Budget?

The budget comprises a loans and advances that are granted to union and state territory by the union government, corporations, government, corporations, government companies and other parties. Capital budget also includes capital receipts and payments by the government.

3.  What is Direct Taxes Code Bill?

The direct taxes code bill became effective from 1st April, 2012. It call for the simplification of tax structure, no additional surcharge/cess will be levied preferential treatment to women tax payers will be stopped and raises the exemption limit of income tax to Rs. 2 lakh. 

4.  What is Goods and service Tax (GST)?

The Central Government has done away with central sales tax in a phased manner and introduced the new tax called goods and service tax, which was applicable throughout India by August 2012 at standard rate of 12%. Service tax confronts challenges of its share being below its potential, complexity in tax law, and need to bring it closer central excise law for eventual transition to goods and service tax.

5.  What do you understand by the Finance Bill?

The finance is a bill ordinarily introduced every year to give effect to the financial proposals of the government for the following financial year.

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