According to the Economic Survey 2016 17 the Fiscal Responsibility Legislations FRLs adopted by the ...........

Economic Affairs Public Finance and Debt Management

According to the Economic Survey 2016-17, the Fiscal Responsibility Legislations (FRLs) adopted by the states were alone not responsible for the deficit reduction, other exogenous factors were also equally important. What are those exogenous factors according to the survey?

1) Acceleration of GDP growth thereby boosting states' revenue

2) Increased transfers from the centre to the states

3) Reduced interest payments of states on account of debt restructuring package offered by centre

4) Reduced need for spending by the states owing to many centrally sponsored schemes being run by the centre

codes:

1 and 2 only

3 and 4 only

1,3 and 4 only

All of the above

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Explanation:

From the survey:
Just because fiscal progress followed the introduction of the FRL doesn’t mean the FRLs were responsible for this progress. To begin with, the deficit reduction owes much to favorable exogenous factors:
• An acceleration of nominal GDP growth (of 6 percentage points on average) helped boost states’ revenues by about 1
percent of GSDP;
• Increased transfers from the centre of about 1 percent of GSDP both because of the 13th Finance Commission recommendations and the surge in central government revenues;
• Reduced interest payments of about 0.9 percent of GSDP on account of the debt restructuring package offered by the centre; and
• Reduced need for spending by the states—estimated at about 1.2 percent of GDP—as the centre took on a number of major social sector expenditures under the Centrally Sponsored Schemed (CSS)