Government of Rajasthan enacted the Rajasthan Fiscal Responsibility and Budget Management (FRBM) Act in year
- (1)2008
- (2)2005
- (3)2003
- (4)2001
Answer
Why
Correct — option (2), 2005.
The law is the Rajasthan Fiscal Responsibility and Budget Management Act, 2005, numbered Rajasthan Act No. 7 of 2005. Its authorised English translation, published in the Rajasthan Gazette on 3 May 2005, records that it received the Governor's assent on 2 May 2005.
Later amending Acts refer back to it the same way. The Amendment Act of 2011 (Act No. 11 of 2011) and the Amendment Act of 2021 (Act No. 13 of 2021) each amend section 6 of "Rajasthan Act No. 7 of 2005".
So the year of enactment is 2005.
The idea to remember: the Union's FRBM Act dates from 2003; Rajasthan's own FRBM Act is Act No. 7 of 2005.
Why the others are wrong
- (1)2008 — By 2008 the Act had already been on the statute book for three years: it received the Governor's assent on 2 May 2005.
Its later changes came by amending Acts, including those of 2011 and 2021, each describing the principal law as Rajasthan Act No. 7 of 2005. None of them re-enacted it.
- (3)2003 — 2003 is the year of the Union's Fiscal Responsibility and Budget Management Act, 2003. NCERT's Introductory Macroeconomics dates its enactment to August 2003 and notes that the Act applies to the central government.
Rajasthan passed its own fiscal responsibility law two years later, in 2005.
- (4)2001 — 2001 is earlier than both fiscal responsibility laws named here: the Union's FRBM Act (August 2003) and Rajasthan's Act (assent 2 May 2005).
The Rajasthan Act's number, Act No. 7 of 2005, itself fixes the year it was passed.
Concept
A fiscal responsibility law binds a government to rules on deficits, debt and disclosure. The Rajasthan Act's long title sets its aims: prudence in fiscal management and fiscal stability through progressive reduction of the revenue deficit, prudent debt management, greater transparency, and fiscal policy in a medium-term framework.
It names three guiding principles in section 4: transparency, stability and responsibility.
It defines the fiscal deficit as total disbursements from the State's Consolidated Fund, excluding debt repayment, in excess of revenue receipts, recovery of loans and non-debt capital receipts.
RPSC's 2023 syllabus lists "Fiscal and Monetary Policies" under Economic Concepts and Indian Economy, and "Macro overview of Economy." under Economy of Rajasthan.
Under section 5, the State Government lays two statements before the Legislature with the annual budget: a Medium Term Fiscal Policy Statement and a Fiscal Policy Strategy Statement.
Rajasthan's Economic Review 2022-23 puts the 2021-22 fiscal deficit at 3.96 per cent of GSDP, or 3.31 per cent excluding a GST-compensation loan and additional capital-expenditure borrowing sanctioned by the Centre, and says it "remained well within the FRBM Act, 2005 norms."
Key facts
- The Rajasthan Fiscal Responsibility and Budget Management Act, 2005 is Rajasthan Act No. 7 of 2005; it received the Governor's assent on 2 May 2005.
- Section 1(3): the Act comes into force on a date the State Government appoints by notification in the Official Gazette.
- Amendment Act, 2011 (No. 11 of 2011): zero revenue deficit from 2011-12, and fiscal deficit of 3 per cent of GSDP by 2011-12.
- Amendment Act No. 13 of 2021 added a section 6 proviso clause: extra borrowing of 0.50% of GSDP, 2021-22 to 2024-25, allowed by the Centre on power sector performance.
- The Union's Fiscal Responsibility and Budget Management Act was enacted in August 2003 and applies to the central government.
Dates for Rajasthan are the Governor's assent. The amendments shown are those appended to PRS Legislative Research's compilation of the Act, not a complete list. Union Act date: NCERT, Introductory Macroeconomics.
Study next
Common traps
- Union versus state: 2003 is the Union's FRBM Act; Rajasthan's FRBM Act is of 2005.
- Assent versus commencement: the Act received assent on 2 May 2005, but section 1(3) leaves its start date to a notification, so the two are separate facts.
- Original versus amended targets: section 6 as enacted already aimed at a 3 per cent fiscal deficit; the 2011 amendment tied that target to financial year 2011-12.
A question can ask the year in which the Rajasthan or Union fiscal responsibility law was enacted, or which target an amendment set.
A question can also give a fiscal deficit figure and ask whether it lies within the limit the Act prescribes.
Related PYQs
Consider the following statements regarding fiscal deficit of Rajasthan : A. The actual fiscal deficit in the year 2022-23 has been 3.76 percent of the State GDP. B. This is less than the limit prescribed by the F.R.B.M. Act, 2005. C. The fiscal deficit of 2022-23 was higher than that of 2021-22. Choose the correct option :
- (1) Both A and C are correct.
- (2) Both A and B are correct.
- (3) Both B and C are correct.
- (4) All A, B and C are correct.
Answer(4)
Same Act, applied. That question gives statements on Rajasthan's 2022-23 fiscal deficit, one of them comparing it with the limit prescribed by the F.R.B.M. Act, 2005 (RPSC's key: all three statements correct); this one asks only the year the Act was enacted.
Which of the following is not associated with financial sector reforms in India initiated after 1991 ?
- (1) Capital adequacy
- (2) Non-performing assets
- (3) F.R.B.M. Act (Fiscal Responsibility and Budget Management)
- (4) SARFAESI Act
Answer(3)
Related law at the Union level. That question asks which item is not associated with financial sector reforms after 1991 (RPSC's key: the F.R.B.M. Act); this one asks the enactment year of Rajasthan's own FRBM Act.
Practice
- practice — not a real PYQ
Under the Rajasthan Fiscal Responsibility and Budget Management (Amendment) Act, 2011 (Act No. 11 of 2011), the State Government was to achieve a fiscal deficit of 3 per cent of GSDP by financial year
- (a)2008-09
- (b)2011-12
- (c)2014-15
- (d)2024-25
Answer(2) — The amended section 6(b) says 3 per cent of GSDP by financial year 2011-12. Option (3) is the last year of the debt caps set by the Second Amendment Act, 2011, and option (4) ends the extra-borrowing window added in 2021. Option (1) is not the year the amendment sets. - practice — not a real PYQ
Under section 5 of the Rajasthan Fiscal Responsibility and Budget Management Act, 2005, which statements are laid before the State Legislature along with the annual budget?
- (a)Medium Term Fiscal Policy Statement and Fiscal Policy Strategy Statement
- (b)Economic Review and Outcome Budget
- (c)Macroeconomic Framework Statement and Medium Term Fiscal Policy Statement
- (d)Finance Accounts and Appropriation Accounts
Answer(1) — Section 5(1) names the Medium Term Fiscal Policy Statement and the Fiscal Policy Strategy Statement. Option (3) pairs one of them with the Macroeconomic Framework Statement, which NCERT lists under the Union's 2003 Act. Options (2) and (4) are not the statements section 5 names.