Question
Which of the following statements are true regarding FRBM Act 2003?
Select the correct answer using the code given below:
- RBI can subscribe to the primary issues of Central government securities
- RBI can fund Central government fiscal deficit
- The central government can take advances from RBI in case there is a mismatch in cash disbursements and cash receipts
Select the correct answer using the code given below:
Answer: Option D
Answer: (d)
As per the Fiscal Responsibility and Budget Management (FRBM) Act 2003, RBI has been prohibited from subscribing to Central government securities in the primary market.
This has been done so that government should raise money from the market at market interest rate rather than from RBI at a cheaper rate.
The central government is not allowed to borrow from RBI to fund its fiscal deficit but if there is a temporary mismatch in the government’s cash disbursement and cash receipts then, the government can take advance (called ways and means advance) from RBI.
Was this answer helpful ?
Answer: (d)
As per the Fiscal Responsibility and Budget Management (FRBM) Act 2003, RBI has been prohibited from subscribing to Central government securities in the primary market.
This has been done so that government should raise money from the market at market interest rate rather than from RBI at a cheaper rate.
The central government is not allowed to borrow from RBI to fund its fiscal deficit but if there is a temporary mismatch in the government’s cash disbursement and cash receipts then, the government can take advance (called ways and means advance) from RBI.
Was this answer helpful ?
More Questions on This Topic :
Latest Videos
Latest Test Papers
Submit Solution