Which statement is true for the Finance Sector (Fiscal Management) in the Union Budget 2023-24?
- (a)Budget estimate 2023-24 for total expenditure is ₹55 lakh Cr.
- (b)Fiscal Deficit 2025-26, the target is to be below 5.5%.
- (c)Fiscal Deficit of 3.5% of GSDP allowed for states.
- (d)Twenty years interest-free loans to states.
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.
- (a)Budget estimate 2023-24 for total expenditure is ₹55 lakh Cr. — Total expenditure (BE 2023-24) was about ₹45.03 lakh crore (₹45,03,097 crore), not ₹55 lakh crore.
- (b)Fiscal Deficit 2025-26, the target is to be below 5.5%. — 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)Twenty years interest-free loans to states. — The Budget continued 50-year (not twenty-year) interest-free capital-expenditure loans to States, with an outlay of ₹1.3 lakh crore.
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.
All four options mimic real budget headlines, so precise numbers decide it: swapping 4.5→5.5%, ₹45→55 lakh crore, and 50→20 years leaves only the States' 3.5%-of-GSDP ceiling unchanged and correct.
- States' fiscal-deficit ceiling (FY24) = 3.5% of GSDP; 0.5 pp linked to power-sector reforms.
- Total expenditure BE 2023-24 ≈ ₹45.03 lakh crore.
- Centre's fiscal deficit: 5.9% of GDP (FY24); target below 4.5% of GDP by FY26.
- 50-year interest-free capex loans to States continued (₹1.3 lakh crore).
- Reading '3.5%' as the Centre's deficit — it is the States' GSDP ceiling
- Confusing the 'below 4.5% by FY26' target with the 5.9% FY24 figure
Current-affairs budget questions change one figure per option; UPSC tests the FRBM/deficit concepts, while UPPSC tests the year's specific budget numbers.
Consider the following statements: 1. The FRBM Review Committee Report 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?
- (a) 1 only
- (b) 2 and 3 only
- (c) 1 and 3 only
- (d) 1, 2 and 3
Answer(c) 1 and 3 only
Same concept — Centre-State fiscal-deficit/debt limits and State borrowing under the FRBM/Article 293 framework that underlies the States' 3.5% GSDP ceiling.
Assertion (A): Fiscal deficit is greater than budgetary deficit. Reason (R): Fiscal deficit is the borrowings from the Reserve Bank of India plus other liabilities of the Government to meet its expenditure.
- (a) Both A and R are true, and R is the correct explanation of A
- (b) Both A and R are true, but R is not a correct explanation of A
- (c) A is true, but R is false
- (d) A is false, but R is true
Answer(a) Both A and R are true, and R is the correct explanation of A
Tests the core fiscal-deficit concept that Budget 2023-24's fiscal-management provisions rest on.
- practice — not a real PYQ
The Union Government's fiscal deficit target for 2023-24 (BE), as a percentage of GDP, was:
- (a)6.4%
- (b)5.9%
- (c)4.5%
- (d)3.5%
Answer(b) 5.9% of GDP.
- practice — not a real PYQ
Under its FRBM commitment, the Centre aims to bring its fiscal deficit below what level of GDP by 2025-26?
- (a)3.0%
- (b)4.5%
- (c)5.5%
- (d)6.0%
Answer(b) 4.5% of GDP.