Prelims 2018 · Economy · Question 9
Consider the following statements:<br/>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.<br/>2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.<br/>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.<br/><br/>Which of the statements given above is/are correct?
Answer
1 and 3 only
1. Correct. The FRBM Review Committee (N.K. Singh Committee) recommended a general government debt-GDP ratio of 60% by 2023, split as 40% for Centre and 20% for States.
2. Incorrect. This is reversed. The Centre’s liabilities are much higher as a share of GDP than those of the States; States are not at 49% of GDP while Centre is only 21%.
3. Correct. Under Article 293(3), a State must obtain the Centre’s consent to raise any loan if it has any outstanding loan/guarantee liability to the Central Government.
Hence, statements 1 and 3 only are correct.