The Fiscal Responsibility and Budget Management (FRB

One of the most significant provisions of the FRBM Act, 2003 is that it prohibits the RBI from subscribing to the primary issuance of government securities from April 1, 2006 onwards. This means the government cannot directly borrow from the RBI by getting it to print money a practice known as monetisation of debt or direct deficit financing, which had been a major source of inflation in India before 1997. The government must now raise money through market borrowings, selling securities to banks, insurance companies, and other investors. The Act also requires the government to place before Parliament the Medium-Term Fiscal Policy Statement, the Fiscal Policy Strategy Statement, and the Macroeconomic Framework Statement alongside the Budget.