Which statement is true for the Finance Sector (Fiscal Management) in the Union Budget 2023-24?

Question

UnlockIAS · Accepted Answer

Correct — C. The Union Budget 2023-24 continued to allow States a fiscal deficit of up to 3.5% of GSDP, of which 0.5 percentage point is tied to power-sector reforms. This is the borrowing ceiling the Centre permits States (under Article 293), in line with the Finance Commission's glide path.

Why the other options are wrong — (a) Total expenditure (BE 2023-24) was about ₹45.03 lakh crore (₹45,03,097 crore), not ₹55 lakh crore.  (b) The government's stated target is to bring the fiscal deficit below 4.5% of GDP by FY 2025-26 — not 5.5%. (The FY24 target itself was 5.9% of GDP.)  (d) The Budget continued 50-year (not twenty-year) interest-free capital-expenditure loans to States, with an outlay of ₹1.3 lakh crore.

Concept: Fiscal management in the Union Budget covers the fiscal-deficit glide path (for both the Centre and the States), total expenditure, and Centre-to-State transfers. In FY24 the Centre targeted a fiscal deficit of 5.9% of GDP and pledged to fall below 4.5% by FY26, while capping States at 3.5% of GSDP.

State PCS 2023 Q37 — Economy PYQ with Answer

State PCS 2023 Q37 — Economy PYQ with Answer