The Fiscal Responsibility and Budget Management (FRBM) Review The 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? (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
Answer: C
Statement 1 is correct: The FRBM review panel had recommended the criterion of debt as a parameter for fiscal responsibility the central share being 40% and state 20%. Also, in terms of domestic liabilities the figures are actually, reverse i:e central government 49% and state 21%.
Statement 2 is not correct: At the time of the report submission domestic liabilities of the Central Government accounted for 46.5% of the GDP and that of States accounted for 24% of the GDP
