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Title: Impact of FRBM Act on Fiscal Balance in India
Authors: Dr. Ummed Singh
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Dr. Ummed Singh Assistant Professor, Department of Economics, University of Rajasthan, Jaipur
MLA 8 Singh, Dr. Ummed. "Impact of FRBM Act on Fiscal Balance in India." Int. j. of Social Science and Economic Research, vol. 4, no. 12, June 2019, pp. 7525-7542, ijsser.org/more2019.php?id=575. Accessed Dec. 2019. APA 6 Singh, D. (2019, June). Impact of FRBM Act on Fiscal Balance in India. Int. j. of Social Science and Economic Research, 4(12), 7525-7542. Retrieved from ijsser.org/more2019.php?id=575 Chicago Singh, Dr. Ummed. "Impact of FRBM Act on Fiscal Balance in India." Int. j. of Social Science and Economic Research 4, no. 12 (June 2019), 7525-7542. Accessed December, 2019. ijsser.org/more2019.php?id=575.
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Abstract: The paper examines the impact of the FRBM Act on fiscal balance in India. The FRBM Act aimed to eliminate the revenue deficit and reduce the fiscal deficit to sustainable levels. It mandated the central government to reduce its revenue deficit to zero by 2008-09 and limit the fiscal deficit to 3% of GDP. These targets necessitated significant changes in the government’s fiscal policy, including curbing unproductive expenditures and enhancing revenue mobilization. The OLS Method has been used for examining the impact of FRBM Act on fiscal health of government. The OLS empirical results indicate that the FRBM Act significantly affects the level of the fiscal deficit. The GDP growth rate negatively impacts the fiscal deficit (at the 5 percent level of significance), indicating that as the GDP growth rate increases, the fiscal deficit to GDP ratio decreases and vice-versa. Population growth positively affects the fiscal deficit. The negative coefficient for the FRBM Act indicates that its implementation is linked to a reduction in the fiscal deficit- GDP ratio. This relationship is statistically significant, indicating the impact of the FRBM Act on fiscal deficits. After the implementation of the FRBM Act, the fiscal health has improved due to reduction in both fiscal and the revenue deficit and the implementation of fiscal targets of the Act, brought about a shift towards more prudent fiscal management, compelling the government to prioritize its spending and allocate resources more efficiently.

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