Fiscal Consolidation and the FRBM Framework
The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 mandates fiscal discipline. The NK Singh Committee (2017) revised the framework, recommending a fiscal deficit target of 2.5% of GDP (centre) by FY23 (since modified by COVID disruptions). Non-tax revenues (including RBI dividends and disinvestment) reduce the government's borrowing need and therefore the fiscal deficit. RBI's surplus transfer directly enters the Union Budget as "dividends and profits" under non-tax revenue. A larger-than-budgeted RBI dividend creates fiscal headroom for either higher capital expenditure or lower market borrowings.
- FRBM Act 2003: Fiscal deficit target framework; amended post-COVID
- Fiscal deficit FY27 budget estimate: 4.4% of GDP (as per Budget 2026-27)
- NK Singh Committee (2017): Recommended fiscal deficit glide path, debt anchor (60% of GDP for Centre+States)
- Non-tax revenue components: RBI dividend, dividends from CPSEs, licence fees, spectrum charges
- Escape clause: FRBM allows deviation up to 0.5% of GDP for national security, natural disasters, sharp growth decline
- Market borrowings: RBI dividend reduces government's gross market borrowings, easing bond yields
● Tracked since February 01, 2026 · last seen May 12, 2026 · updates as the daily brief publishes
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