Q9.
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?
Answer
C
Explanation
Statement 1 is correct: The FRBM Review Committee (N.K. Singh) recommended a debt to GDP ratio of 60% with 40% limit for the centre and 20% for the states by 2023. Statement 2 is not correct: The Central Government has domestic liabilities of 46.1% of GDP (not 21%) and States' liabilities were 23.2% (not 49%). Statement 3 is correct: Article 293(3) requires States with outstanding Central Government borrowings to obtain Central Government's prior approval before incurring new debt.