Under the Fiscal Responsibility and Budget Management Act, 2003, which of the following was banned after 2006–07?

Correct option is C

The correct answer is (c) RBI financing of deficit
Explanation:
• The FRBM Act, 2003 was enacted to institutionalize fiscal discipline and reduce fiscal deficit.
• From April 1, 2006, the RBI was prohibited from buying government securities directly from the government, effectively banning deficit financing.
• The ban aimed to curb inflationary tendencies caused by monetized deficit.
• The government must now meet its expenditure through taxes or market borrowings.
• The Act also set targets for reducing fiscal and revenue deficits.
Information Booster:
• The Act has undergone amendments, including escape clauses during emergencies or disasters.
• The NK Singh Committee in 2017 recommended updates to the Act to ensure flexibility.
Additional Knowledge:
Food subsidy release (Option a)
• Food subsidies continue as part of welfare and PDS programs.
External sovereign bonds (Option b)
• India has largely avoided issuing such bonds, but they are not banned.
Infrastructure grants to states (Option d)
• Not banned; infrastructure funding is promoted through centrally sponsored schemes.