CAG Review of the FRBM Act | 22 Aug 2025

Source: TOI 

Why in News? 

The Comptroller and Auditor General (CAG) presented its 2023-24 annual review of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, in Parliament.  

• The review shows that India is moving steadily towards long-term macroeconomic stability. 

What are the Key Highlights of the CAG Review of the FRBM Act for FY 2023-24? 

• Central Government Debt: Declined to 57% of Gross Domestic Product (GDP) (March 2024) from 61.38% in FY 2020-21. 
• General Government Debt (GGD): GGD declined slightly from 83% of GDP in March 2022 to 81.3% in March 2023, still far above the 60% target. 
• Debt Sustainability Analysis (DSA):  DSA assesses the government’s ability to service debt, with the debt-to-GDP ratio as the key measure. 
  • A sustainable fiscal policy is one where the debt-to-GDP ratio is stable or declining over the long term. 
  • The Centre’s debt-to-GDP ratio peaked at 61.38% in FY 2020-21 and declined to 57% in FY 2023-24. 
• Unrealised Taxes: At the end of FY 2023-24, Rs 31.11 lakh crore in taxes remained unrealised, up Rs 9.81 lakh crore from the 2022-23.

What is Fiscal Responsibility and Budget Management (FRBM) Act, 2003? 

• About: The FRBM Act, 2003 was enacted to reduce fiscal deficits and promote long-term macroeconomic stability and inter-generational equity. 
  • It has since been amended in 2004, 2012, 2015, and 2018 to revise deficit targets, set new debt reduction goals, and allow flexibility in fiscal management during crises or economic uncertainties. 
• Key Provisions:   
  • Fiscal Responsibility: The Act mandates that the Finance Minister review fiscal trends and present half-yearly reviews to both Houses of Parliament.  
  • Medium-Term Fiscal Policy (MTFP): The Act mandates the presentation of the MTFP statement, which outlines three-year rolling targets for key fiscal indicators like Revenue Deficit, Fiscal Deficit, and Central Government Debt as a percentage of GDP. 
  • Implementation: The CAG conducts annual reviews to assess the government's compliance with the FRBM targets. 
• FRBM Targets: The 2018 amendment set targets to reduce General Government Debt (Centre + States, excluding inter- governmental liabilities) to 60% of GDP and Central Government Debt to 40% by FY 2024-25.  
  • The Fiscal Deficit(FD) target is 3% of GDP by March 2021(target deferred due to pandemic). The government now commits to FD below 4.5% of GDP by 2025-26. 
    • In June 2025, the Government of India successfully met its fiscal deficit target of 4.8% of GDP for FY 2024–25. 
  • The government shall not provide additional loan guarantees on the security of the Consolidated Fund of India in excess of one-half per cent of GDP in any financial year.