UPSC Prelims Practice Questions — Survey calls for relaxing FRBM for Centre, but says States’ finances worsening

Q1. According to the Economic Survey 2025-26, which one of the following has been proposed as the primary medium-term fiscal anchor for the Central Government until FY 2030-31?

• A. Annual fiscal deficit target of 3% of GDP under the FRBM Act, 2003
• B. General government debt-to-GDP ratio of 50±1%
• C. Revenue deficit target of zero per cent of GDP
• D. Primary deficit target of 1.5% of GDP

Q2. With reference to the Fiscal Responsibility and Budget Management (FRBM) framework in India, consider the following statements: 1. The FRBM Act, 2003 originally envisaged bringing the Centre's fiscal deficit down to 3% of GDP. 2. The N.K. Singh Committee (2016) recommended a Centre's debt ceiling of 40% of GDP and a States' debt ceiling of 20% of GDP. 3. The escape clause introduced through the 2018 FRBM amendment permits deviation from the fiscal deficit target by up to 0.5 percentage points of GDP under specified conditions. 4. The Economic Survey 2025-26 recommends an immediate scrapping of the FRBM Act, 2003 in favour of a States-only fiscal rule. Which of the statements given above is/are correctly identified?

1. The FRBM Act, 2003 originally envisaged bringing the Centre's fiscal deficit down to 3% of GDP.
2. The N.K. Singh Committee (2016) recommended a Centre's debt ceiling of 40% of GDP and a States' debt ceiling of 20% of GDP.
3. The escape clause introduced through the 2018 FRBM amendment permits deviation from the fiscal deficit target by up to 0.5 percentage points of GDP under specified conditions.
4. The Economic Survey 2025-26 recommends an immediate scrapping of the FRBM Act, 2003 in favour of a States-only fiscal rule.

• A. 1, 2 and 3 only
• B. 2 and 4 only
• C. 1 and 3 only
• D. 1, 2, 3 and 4

Q3. As per the Economic Survey 2025-26, the combined fiscal deficit of the State Governments stood at approximately what percentage of GDP in FY 2024-25?

• A. 2.5% of GDP
• B. 2.8% of GDP
• C. 3.2% of GDP
• D. 4.4% of GDP

Q4. With reference to the Economic Survey 2025-26's observations on India's fiscal position, consider the following statements: 1. The Centre's fiscal deficit for FY 2025-26 is estimated at 4.4% of GDP. 2. The general government debt-to-GDP ratio stood at 55.7% in FY 2024-25. 3. The Survey recommends an immediate reinstatement of the FRBM Act's 3% fiscal deficit target for the Centre. 4. The Centre's revenue deficit for FY 2025-26 is projected to be the lowest since FY 2008-09. Which of the above is/are NOT correct?

1. The Centre's fiscal deficit for FY 2025-26 is estimated at 4.4% of GDP.
2. The general government debt-to-GDP ratio stood at 55.7% in FY 2024-25.
3. The Survey recommends an immediate reinstatement of the FRBM Act's 3% fiscal deficit target for the Centre.
4. The Centre's revenue deficit for FY 2025-26 is projected to be the lowest since FY 2008-09.

• A. 3 only
• B. 1 and 2 only
• C. 3 and 4 only
• D. 2 and 3 only

Q5. Consider the following statements comparing the fiscal-anchor recommendations of the N.K. Singh Committee (2016-17) with those of the Economic Survey 2025-26: 1. While the N.K. Singh Committee recommended a Centre-specific debt ceiling of 40% of GDP, the Economic Survey 2025-26 proposes a general government debt-to-GDP target of 50±1% by FY 2030-31. 2. Unlike the N.K. Singh Committee, which sought to retain a fiscal-deficit numeric target (2.5% of GDP by FY 2022-23), the Economic Survey 2025-26 argues for relaxing the rigid annual fiscal deficit target in favour of a debt-based anchor. 3. Both the N.K. Singh Committee and the Economic Survey 2025-26 propose eliminating the escape clause from the FRBM framework. Which of the statements given above is/are correct?

1. While the N.K. Singh Committee recommended a Centre-specific debt ceiling of 40% of GDP, the Economic Survey 2025-26 proposes a general government debt-to-GDP target of 50±1% by FY 2030-31.
2. Unlike the N.K. Singh Committee, which sought to retain a fiscal-deficit numeric target (2.5% of GDP by FY 2022-23), the Economic Survey 2025-26 argues for relaxing the rigid annual fiscal deficit target in favour of a debt-based anchor.
3. Both the N.K. Singh Committee and the Economic Survey 2025-26 propose eliminating the escape clause from the FRBM framework.

• A. 1 only
• B. 1 and 2 only
• C. 2 and 3 only
• D. 1, 2 and 3