High amount of deficits are not goods for the economy as they create liabilities and uncontrolled deficit and indicates financial indiscipline on the part of the government. It also increases inflation. That is why to check such practices of the governments, the Fiscal Responsibility and Budget Management Act (FRBMA) was passed in 2003.
It seeks to instill financial discipline, reduce fiscal deficit, improve macroeconomic ‘management and the overall management of the public funds by moving towards a balance budget.
