UPSC CIVIL SERVICES PRELIMINARY EXAMINATION

UPSC Prelims 2018— Question 9

2018General Studies Paper-IEconomyPublic Financemoderate
Q9

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 war of GDP of the State 2 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?

Options

A
1 only
B
2 and 3 only
C
1 and 3 only✓ Correct Answer
D
1, 2 and 3
AnswerOption C

Explanation

**Concept and analysis:** The FRBM Review Committee proposed a general government debt target of 60% of GDP, with a 40% central and 20% state allocation as a medium-term fiscal framework. The figures in statement 2 are not consistent with the committee's debt assessment. Article 293 of the Constitution also requires a state to obtain the consent of the Government of India for borrowing when the state has outstanding loans or liabilities to the Union, subject to the constitutional conditions. The question is testing precise UPSC-level identification rather than a broad association. The key is to distinguish the exact institutional, constitutional, historical, geographical, economic or scientific feature being asked. **Option-wise evaluation** **Option A:** Incorrect. It selects 1 only, but that combination does not match the verified statement-level assessment; it either includes a false statement or omits a true one. **Option B:** Incorrect. It selects 2 and 3 only, but that combination does not match the verified statement-level assessment; it either includes a false statement or omits a true one. **Option C:** Correct. It selects statements 1, 3; these are the statements supported by the relevant constitutional, economic, historical, scientific or geographical facts. **Option D:** Incorrect. It selects 1, 2 and 3, but that combination does not match the verified statement-level assessment; it either includes a false statement or omits a true one. **UPSC takeaway:** The safest way to solve this type of question is to anchor the answer in the defining feature of the concept and then test every option against that feature. Closely related institutions or terms are often used as distractors. In statement-based questions, do not judge the option as a whole before checking each statement independently. In factual questions, compare the wording of each option with the exact definition, location, institutional role, chronology or scientific property. The correct answer follows from that verification rather than from familiarity with a keyword.

Question Classification

SubjectEconomy
TopicPublic Finance
SubtopicTerminal topic
Question TypeStatement-based MCQ
Difficultymoderate
VerificationVerified