gs1medium

Consider the following statements:

  1. 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. 2.The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
  3. 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. A.1 only
  2. B.2 and 3 only
  3. C.1 and 3 only
  4. D.1, 2 and 3
▶ Answer & Explanation

Correct answer: C. 1 and 3 only

The FRBM Review Committee (chaired by N.K. Singh) indeed recommended a fiscal deficit target of 3% of GDP and a debt-to-GDP ratio of 60% for the general government by 2023, with specific targets for the center and states. Article 293(3) of the Constitution mandates that a state requires the Centre's consent to raise loans if it has outstanding liabilities to the Union government, covering borrowing both within and outside India.

Source: UPSC gs1 2018

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