Which one of the following statements is correct? Fiscal Responsibility and Budget Management Act (FRBMA) concerns
- Afiscal deficit only
- Brevenue deficit only
- Cboth fiscal and revenue deficitCorrect
- Dneither fiscal deficit nor revenue deficit.
Explanation
The Fiscal Responsibility and Budget Management Act, 2003 was enacted to institutionalize financial discipline and reduce the governments fiscal and revenue deficits. It mandates the government to set specific targets for reducing both the fiscal deficit, which represents total borrowing requirements, and the revenue deficit, which represents the excess of current expenditure over current receipts. Therefore, the act concerns both types of deficits to ensure long term macroeconomic stability.
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