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?

Question

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&rsquo;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?

CollectorBabu · Accepted Answer

Correct Answer: 1 and 3 only. ● The Fiscal Responsibility and Budget Management Committee headed by N.K. Singh submitted its report in January 2017. ● 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. ● Since Panel recommended Government to reduce the debt to GDP, so, definitely Central Government&rsquo;s present domestic liability couldn&rsquo;t be 21% otherwise it&rsquo;d negate statement 1. Also, the Domestic liability figures (Economic Survey 2017-18) is in the range of 54% to 47% of GDP each year from 2008 to 2017 for the Union Government. So, statement 2 is incorrect.   ● As per the Constitution of India, it is mandatory for a State to take the Central Government&rsquo;s consent for raising any loan if the former owes any outstanding liabilities to the latter (A-293).

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