Consider the following statements 1 The Fiscal Responsibility and Budget Management FRBM Review Comm...........

Economic Affairs Public Finance and Debt Management

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 Government.

2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Government.

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 letter.

Which of the statements given above is/are correct?

This questions was previously asked in

UPSC CSP Previous Year Paper (2018)

Download PDF Appear Online

View All IAS Previous Year Papers

1 only

2 and 3 only

1 and 3 only

1, 2 and 3

छोटे Courses बड़े Results

Master Public Finance and Debt Management

Prepare through Micro-courses

Try Now

Explanation:

The FRBM Review Committee under chairpersonship of Mr. N.K. Singh suggested using debt as the primary target for fiscal policy. A debt to GDP ratio of 60% should be targeted with a 40% limit for the centre and 20% limit for the states. Statement 1 is correct. The targeted debt to GDP ratio should be achieved by 2023. Statement 2 is correct.

The Central Government has domestic liabilities of 46.1% of GDP (2016-17) and as a per cent of GDP, States’ liabilities increased to 23.2 per cent. So, Statement 2 is incorrect.

Under Article 293 of the Constitution a State may not without the consent of the Government of India raise any loan if there is still outstanding any part of a loan which has been made to the State by the Government of India or by its predecessor Government, or in respect of which a guarantee has been given by the Government of India or by its predecessor Government. Statement 3 is correct.