JKPSC Prelims 2024
General Studies (Paper 1)
Answer & Explanation
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Correct Answer:
Option A —
40 percent of GDP and 60 percent of GDP, respectively
The FRBM TargetsThe Fiscal Responsibility and Budget Management (FRBM) Act was amended based on the recommendations of the N.K. Singh Committee (2016). The committee suggested a debt-to-GDP roadmap to ensure long-term fiscal sustainability in India.
The specific targets set are:
Central Government Debt: To be capped at 40% of the GDP.
General Government Debt: (This includes the combined debt of both the Central and State governments) to be capped at 60% of the GDP.
Key Objectives of these Limits
Fiscal Discipline: To ensure the government doesn't borrow beyond its means to repay.
Inter-generational Equity: To prevent future generations from being burdened by the debt incurred today.
Inflation Control: High government debt often leads to higher money supply or increased interest rates, which can trigger inflation.
Answer verified by Quintessence Classes faculty — Karan Nagar, Srinagar.
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