In which year was the Madhya Pradesh Rajkoshiya Uttardayitva Evam Budget Prabandhan Adhiniyam passed?
- (a)2003
- (b)2004
- (c)2005
- (d)2006
Correct — C, 2005. The Madhya Pradesh Rajkoshiya Uttardayitva Evam Budget Prabandhan Adhiniyam (the state's Fiscal Responsibility and Budget Management Act) was enacted in 2005. Like most Indian states, Madhya Pradesh legislated its own FRBM law after the Twelfth Finance Commission (2005-10) offered debt relief to states that adopted binding fiscal-discipline targets. The Act commits the state to capping its fiscal deficit and eliminating its revenue deficit along a defined path.
- (a)2003 — This is the year Parliament enacted the CENTRAL FRBM Act — the classic Centre-vs-State date trap; Madhya Pradesh's own Act came two years later, in 2005.
- (b)2004 — Madhya Pradesh did not pass its fiscal-responsibility statute in 2004; the state law followed the Twelfth Finance Commission's incentive, in 2005.
- (d)2006 — Too late — MP's FRBM Act was already enacted in 2005.
Fiscal Responsibility and Budget Management (FRBM) laws bind a government to numerical fiscal targets — chiefly capping the fiscal deficit (fresh borrowing) and eliminating the revenue deficit — and to greater budget transparency. The Union enacted its FRBM Act in 2003; the states enacted their own versions, mostly around 2005, after the Twelfth Finance Commission tied debt relief to such legislation.
The tempting wrong answer is 2003, the famous date of the Central FRBM Act. This question asks about Madhya Pradesh's state Act, which followed the 12th Finance Commission's debt-relief incentive and was passed in 2005.
- MP's FRBM Act (Rajkoshiya Uttardayitva Evam Budget Prabandhan Adhiniyam) was enacted in 2005.
- The Central (Union) FRBM Act was passed by Parliament in 2003.
- The Twelfth Finance Commission (2005-10) linked state debt relief to enacting FRBM laws, prompting most states to legislate around 2005.
- FRBM laws target the fiscal deficit and the revenue deficit and mandate greater budget transparency.
- Answering 2003 (the Central Act's year) when the question is about the MP state Act (2005)
- Mixing up the fiscal deficit and the revenue deficit targets of FRBM laws
MPPSC asks the year/provisions of MP's own FRBM Act; UPSC asks the deficit definitions and provisions of the Central FRBM Act, 2003.
Which one of the following statements is correct? Fiscal Responsibility and Budget Management Act (FRBMA) concerns
- (a) fiscal deficit only
- (b) revenue deficit only
- (c) both fiscal and revenue deficit
- (d) neither fiscal deficit nor revenue deficit
Answer(c) both fiscal and revenue deficit
Same FRBM framework the MP Act belongs to — FRBM laws target both the fiscal and the revenue deficit.
Which one of the following was NOT stipulated in the Fiscal Responsibility and Budget Management Act, 2003?
- (a) Elimination of revenue deficit by the end of the fiscal year 2007-08
- (b) Non-borrowing by the Central Government from Reserve Bank of India except under certain circumstances
- (c) Elimination of primary deficit by the end of the fiscal year 2008-09
- (d) Fixing government guarantees in any financial year as a percentage of GDP
Answer(c) Elimination of primary deficit by the end of the fiscal year 2008-09
Tests the provisions of the Central FRBM Act — the same fiscal-responsibility law the MP state Act mirrors.
- practice — not a real PYQ
The Central Fiscal Responsibility and Budget Management (FRBM) Act was enacted by Parliament in which year?
- (a)2000
- (b)2003
- (c)2005
- (d)2008
Answer(b) 2003 — the Union FRBM Act; most states passed their versions around 2005.
- practice — not a real PYQ
Which body's recommendation is chiefly credited with prompting Indian states to enact their own FRBM legislation around 2005?
- (a)Eleventh Finance Commission
- (b)Twelfth Finance Commission
- (c)Planning Commission
- (d)NITI Aayog
Answer(b) Twelfth Finance Commission (2005-10) — it tied state debt relief to FRBM laws.