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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?

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? Correct Answer 1 and 3 only

The correct answer is 1 and 3 only.

  • The Fiscal Responsibility and Budget Management (FRBM) Review Committee chaired by Mr. N.K. Singh submitted its report in January 2017.
  • The Committee suggested using debt as the primary target for fiscal policy.
  • Debt to GDP ratio of 60% should be targeted with a 40% limit for the center and 20% limit for the states.
  • The targeted debt to GDP ratio should be achieved by 2023. Hence, statement 1 is correct.
  • The Central Government has domestic liabilities of 46.1% of GDP (2016-17) and as a percent of GDP, whereas States’ Government liabilities increased to 23.2 % at end-March 2016. Hence, statement 2 is not correct.
  • Article 293(1) empowers State Governments to borrow only from domestic sources.
  • Further, according to Article 293(3) as long as a State has outstanding borrowings from the Central Government, it is required to obtain Central Government's prior approval before incurring debt. Hence, statement 3 is correct.

Related Questions

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Consider the following statements in the context of Indian Public Finance: 1. The fiscal deficit is the excess of total budget expenditure over total budget receipts including borrowings during a fiscal year 2. The upward trend in the ratio of Fiscal deficit to GDP has an adverse effect on private investment. Which of the statements given above is/are correct?
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Consider the statements in respect of vapor absorption and vapor compression refrigeration systems. 1. The former runs on low-grade energy. 2. The pumping work in the former is negligible since the specific volume of the strong liquid solution is small. 3. The latter uses an absorber while the former uses a generator. 4. The liquid pump alone replaces the compressor of the latter. Which of these statements are correct?
Nine individuals - Z, Y, X, W, V, U, T, S and R - are the only candidates, who can serve on three committees-K1, K2 and K3, and each candidate should serve on exactly one of the committees. Committee K1 should consist of exactly one member more than committee K2. It is possible that there are no members in committee K3. Among Z, Y and X none can serve on committee 10. Among W, V and U none can serve on committee K2. Among T, S and R none can serve on committee K3. In case committee K2 is served by T and Z only, how many of the nine individuals should serve on committee K3?  Of the nine individuals, the largest number that can serve together on committee K3 is:
Which of the following statement(s) is/are correct, regarding the duties and rights of the Attorney-General for India in performance of his duties?
1. The Attorney-General for India shall give advice to the Government of India upon legal matters.
2. The Attorney-General for India shall have a right to audience in all Courts in India.
3. The Attorney-General for India shall have the right to speak in the proceedings of either House.
4. The Attorney-General for India shall not be liable to any proceedings in any court in respect of anything said by him in Parliament or any committee thereof.
Directions : In each of the following questions a statement is given, followed by three conclusions. Give answer :

Statement : The Central Government has directed the State Governments to reduce government expenditure in view of the serious resource crunch and it may not be able to sanction any additional grant to the states for the next six months.

Assumptions :
I. The State Governments are totally dependent on Central Government for its expenditures.
II. The Central Government has reviewed the expenditure account of the State Government.
III. The State Governments will abide by the directive.
Which of the following has been suggested as a substitute for the Fiscal Responsibility and Budget Management (FRBM) Act by the Fourteenth Finance Commission?
Consider the following statements about the GDP Deflator. 1. GDP deflator is the ratio of nominal GDP to real GDP. 2. GDP deflator indicates the change in the price level between the base year and the current year. 3. While calculating GDP deflator, the volume of production is considered as fixed. Which of statements given above is/are correct?
Which among the following is not an objective of Fiscal Responsibility and Budget Management Act (FRBM Act), 2003?