FRBMA is the policy enacted in 2003 to reform fiscal policy. Through this reform government is made responsible and given various target and suggestion.
The rule under the act were notified with effect from july,2004.
The main features of the FRBMA are following.
1.The act mandate the central government to take appropriate measures to reduce fiscal deficit to not more than 3 percent GDP and to eliminate the revenue deficit by March 31 ,2009 and thereafter buildup adequate revenue surplus.
2. It requires the reduction in fiscal deficit by .3 percent of GDP each year and the revenue deficit by 0.5 percent. If this is not achieved through tax revenues ,the necessary adjustment has to come from a reduction in expenditure.
3. The actual deficit may exceed the target specified only on the grounds of national security or national calamity or such other exceptional grounds as the central government may specify.
4. The Central government shall not borrow from the Reserve Bank Of India except by way of advances to meet temporary excess of cash disbursement over cash receipts.
5. The Reserve Bank Of India must not subscribe to the primary issues of Central government securities from the year 2006-2007.
6 .Measures to be taken to ensure the great transparency in fiscal operations.
7 .The Central government to lay before both houses of parliament three statements -Medium term -Fiscal policy statements, The Fiscal policy strategy statements, The Macroeconomics framework statements along with the Annual financial statements.
8 .Quarterly review of the trends in receipts and expenditure in relation to the budget be placed before both the houses of parliament.