AIR 34 · CSE 2017 · GS3 · 52 pages

Gaurav Kumar: GS3 answer copy

20 answers by Gaurav Kumar, as written in the test. Each question opens a page with how other toppers answered it.

The questions

  1. Q5Rare earths are not just elements; they are foundational inputs that act like 'seeds of technology'. (10 marks, 150 words) Elaborate.10 marks

The answers

Question 1 · 10 marks · 219 words written

The Union Budget 2025-26 outlines a shift towards the 'debt-to-GDP ratio' as the fiscal anchor starting from FY 2026-27. Discuss the rationale behind this shift.

Opening · a definition

The debt to GDP ratio is the cumulative addition of deficits through years. It is stock concept while fiscal deficit is flow concept.

Budget outlines shift towards debt-GDP as fiscal anchor because:

Body · points

  1. Tough to anchor fiscal deficit: years wise control over deficit term is difficult due to multiple & large expenditures (eg) 9.6 %D in COVID.

  2. Mere 0.5% escape clause in FRBM (NK Singh Committee) → so tough for govt to balance public welfare & austerity in finance.

  3. Debt to GDP ratio gives time to fiscal manuever: till 2025 govt in targeting 60% of GDP (Debt/GDP)

  4. Control over debt/GDP is easier than fiscal deficit in long run; in short run fiscal deficit target can be breeched for countercyclical policies like PM-Kisan, MNREGA expenditure during slowdown.

  5. To avoid criticism of fiscal profligacy - difficult to track debt/GDP by public.

  6. Why not target the 'final fiscal anchor' rather then intermediate fiscal deficit?

  7. In the end, stock variable target (debt/GDP 60% Centre, 40% States - FRBM) to be achieved.

  8. Centre-states fiscal tussle over fiscal deficit - though states are within 3%, Centre is constantly deviating 9% → 6.8% → 6.7% → 5.6% from 2020-2025.

Close · a summary

Therefore, to escape the tighter grip over fiscal space, to get fiscal freedom to spend, govt is going for debt/GDP.