Economics · Fiscal Policy
Analyze the following statements regarding the FRBM Act and Fiscal Policy tools. Statement I: The FRBM Act requires the government to lay a Medium-Term Fiscal Policy Statement and a Fiscal Policy Strategy Statement along with the Union Budget. Statement II: The 'Escape Clause' in the FRBM Act allows the government to exceed the fiscal deficit target by 0.5 percent in cases of national security, war, or structural reforms with unanticipated fiscal implications. Statement III: Primary Deficit is a better indicator of the government's current fiscal effort because it excludes the burden of past debt. Statement IV: The government's revenue deficit must be eliminated completely by 2025 as per the latest amendments to the FRBM Act. Which of the following describes the validity of these statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1All statements are correct.
- 2Only Statement I and II are correct.
- 3Statement II and IV are correct; Statement I and III are incorrect.
- 4Statement I, II, and III are correct; Statement IV is incorrect.✓
Correct answer
Statement I, II, and III are correct; Statement IV is incorrect.
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