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 ?
- (a) 1 only
- (b) 2 and 3 only
- (c) 1 and 3 only ✓ UPSC's answer
- (d) 1, 2 and 3
Why the answer is (c)
• Statement 1 is correct: the N.K. Singh FRBM Review Committee (2017) recommended a general-government debt–GDP ceiling of 60% by 2023 — 40% for the Centre and 20% for the States.
• Statement 3 is correct: Article 293(3) requires a State to obtain the Centre's consent before raising a loan if it has outstanding loans from the Centre.
• Statement 2 is wrong: the figures are reversed — the Centre's liabilities were about 46–49% of GDP and the States' about 21%.
• Hence 1 and 3 only, option (c).
Why the other options are wrong
- (a) 1 only
- Statement 3 on Article 293(3) is also correct.
- (b) 2 and 3 only
- Statement 2 is wrong: the ratios are reversed.
- (d) 1, 2 and 3
- Statement 2 is wrong.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2018, held on 3 June 2018. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.