Which one of the following was not stipulated in the Fiscal Responsibility and Budget Management Act, 2003?
- AElimination of revenue deficit by the end of the fiscal year 2007-08
- BNon-borrowing by the central government from Reserve Bank of India except under certain circumstances
- CElimination of primary deficit by the end of the fiscal year 2008-09Correct
- DFixing government guarantees in any financial year as a percentage of GDP
Explanation
The correct answer is C because the Fiscal Responsibility and Budget Management Act, 2003, focused on reducing the revenue deficit and the fiscal deficit, but it did not set a specific target for the elimination of the primary deficit.
The original Act mandated the elimination of the revenue deficit by March 2008 later extended to 2009 and the reduction of the fiscal deficit to 3 percent of GDP. It also prohibited the central government from borrowing directly from the RBI except for temporary cash management issues and required the government to set a ceiling on the guarantees it provides. Since the primary deficit is the fiscal deficit minus interest payments, it was not the direct target of the legislation.
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