Fiscal Consolidation and FRBM Act in India

Fiscal consolidation refers to the policies undertaken by the government to reduce all types of budget deficits and reduce debt burden. Fiscal Deficit and Revenue Deficit are the key deficits of the budget. The FRBM act was enacted to enforce fiscal discipline and reduce expansionary fiscal policies. The act sets phased targets for fiscal and revenue deficit reduction. The targets to be achieved in 2008 were relaxed due to global recession. However, there has been increased concern over expanding deficit. It is realized that urgent requirement arises for strict adherence to FRBM norms and improving fiscal health of the country. In this light, this paper seeks to assess the budget deficits in the last two decades.