Consider the following statements:
- 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.
- The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
- 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?
[UPSC Civil Services Exam – 2018 Prelims]
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
- The Fiscal Responsibility and Budget Management (FRBM) Review Committee chaired by Mr. N.K. Singh submitted its report in January 2017.
- 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.
- 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.