Fiscal Responsibility and Budget Management (FRBM) Act
The FRBM Act, 2003, mandates that the central government and states maintain fiscal discipline by capping fiscal deficits and eliminating revenue deficits over time. The 3% of GSDP fiscal deficit ceiling for states is the key norm tested in UPSC.
- FRBM Act enacted: 2003 (Central); states have their own FRBM Acts.
- Fiscal deficit ceiling for states: 3% of GSDP (with some escape clauses for capital expenditure during crises).
- Revenue deficit = Revenue expenditure minus Revenue receipts; FRBM mandates elimination of revenue deficit.
- The NK Singh Committee (2017) reviewed FRBM and recommended a medium-term fiscal consolidation roadmap.
- States that adhere to FRBM can access extra borrowing headroom (up to 0.5% of GSDP) under certain conditions.
● Tracked since February 01, 2026 · last seen May 25, 2026 · updates as the daily brief publishes
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