Skip to content

CSEET · Economic and Business Environment · Indian Union Budget

Which statement about the escape clause in the FRBM framework is correct?

The FRBM escape clause allows the government to deviate from fiscal targets only on specified exceptional grounds, such as national security, war, calamity or a sharp economic slowdown. It is not a general relief for revenue shortfalls and does not remove parliamentary reporting duties.

  1. AIt allows deviation from deficit targets only for specified grounds such as national security, war, calamity or a sharp economic slowdownCorrect
  2. BIt permits the government to ignore targets whenever revenue falls short
  3. CIt lets the RBI set fiscal targets
  4. DIt removes the need to present fiscal statements to Parliament

Explanation

The escape clause permits temporary deviation from targets only in exceptional circumstances like national security, war, national calamity, collapse of agriculture or a sharp fall in real output. It is not a general relaxation, and statements to Parliament are still required.

Did you get it right without looking?

One question tells you little. A timed set on Indian Union Budget shows your real accuracy, how long you take and where you lose marks.

Practise Indian Union BudgetFree diagnostic mock

More Indian Union Budget questions