The Fiscal Responsibility and Budget Management (FRBM) Act was passed by Parliament in:

The Fiscal Responsibility and Budget Management Act was passed by Parliament in August 2003, during the government of Prime Minister Atal Bihari Vajpayee, and came into force in July 2004. The Bill was introduced in Parliament in December 2000.

The aim of the FRBM Act is to bring discipline into the government's finances. It sets targets for the government to reduce its fiscal deficit and revenue deficit, manage public debt better and make the budget process more transparent. The original Act required the Centre to:

Bring the fiscal deficit down to 3% of GDP.

Eliminate the revenue deficit.

Limit the government's guarantees and additional liabilities.

The Act also requires the government to place three statements before Parliament along with the Union Budget every year: the Medium-term Fiscal Policy Statement, the Fiscal Policy Strategy Statement and the Macroeconomic Framework Statement. Under it, the RBI was also barred from buying government securities directly in the primary market, except in special circumstances.

The targets were postponed several times, especially after the global financial crisis of 2008 and the COVID-19 pandemic. In 2016, a committee under N.K. Singh reviewed the Act. It recommended using the debt-to-GDP ratio as the main target and suggested an "escape clause" allowing deviation of up to 0.5% of GDP in situations such as war, national calamity or a severe fall in growth. The Act was amended in 2018 accordingly, setting a target of 40% of GDP for central government debt. Most states have passed their own fiscal responsibility laws.

Why not the other options?

• ✗1991 is the year of the economic reforms.
• ✗1999 is the year the Foreign Exchange Management Act (FEMA) was passed.
• ✗2008 is the year of the global financial crisis, after which FRBM targets were relaxed.