Fiscal Federalism and the FRBM Framework in India: A Conceptual Review of Achievements, Challenges, and Research Prospects
DOI:
https://doi.org/10.53983/ijmds.v14n11.003Keywords:
Fiscal Federalism, FRBM Act, Fiscal Discipline, Budgets, Fiscal ManagementAbstract
This paper studies the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, which was introduced to bring fiscal discipline and stability in India. The main objective is to examine its theoretical framework, provisions, and role in reducing deficits and improving budget management. The study uses a descriptive and analytical method based on secondary sources such as Finance Commission reports, government documents, and Indian research papers. The findings show that while the FRBM Act helped improve fiscal indicators like the fiscal and revenue deficits and promoted transparency, it also faced challenges due to off-budget borrowings, weak enforcement, and deviations during crises like the 2008 financial crisis and the COVID-19 pandemic. The conclusion suggests that reforms are needed, such as flexible targets, independent fiscal councils, and stronger accountability, to make the FRBM Act more effective in ensuring long-term fiscal sustainability. This paper enhances the literature by emphasizing the necessity for state-specific fiscal objectives within India's FRBM framework, grounded in a theoretical analysis of fiscal federalism and fiscal responsibility legislation.
JEL Code: H60, H61, H62, H77.
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