UPSC Previous Year Question | Prelims GS | 2018

Consider the following statements: 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments. 2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments. 3. As per the Constitution of India, it is mandatory for a State to take the Central Government's consent for raising any loan if the former owes any outstanding liabilities to the latter. Which of the statements given above is/are correct?

  1. 1 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2 and 3

Answer

Correct Answer

1 and 3 only

Explanation

Statement 1 correctly states the FRBM Review Committee (N.K. Singh) recommendation. Statement 2 reverses the figures: the Centre's liabilities are about 49% of GDP and the States' about 21%. Statement 3 is correct under Article 293(3): a State needs the Centre's consent to borrow if any loan given by the Centre remains outstanding.

Topics: economy, fiscal policy and borrowing, frbm review committee and article 293, public finance