AIR 75 · CSE 2024 · GS3 · 53 pages

Ketan Sukla: GS3 answer copy

18 answers by Ketan Sukla, as written in the test. Each question opens a page with how other toppers answered it.

The questions

The answers

Question 1 · 10 marks · 172 words written

Highlighting the factors contributing to high fiscal deficit in India, discuss the potential consequences of such deficit and suggest measures to ensure fiscal consolidation.

Opening · a figure

India is currently having 5.6% Fiscal Deficit, which is expected to reduce to 5.1% in FY25.

Body · points

Factors contributing to High Fiscal Deficit

  1. High revenue expenditure of the government [₹ 37 Lakh crore] in Budget.
  2. Low tax-to-GDP ratio. [Data 11.7% {china = 20%}]
  3. Post-pandemic fiscal challenges.
  4. High subsidy burden on Government [Ex 2.1 Lakh Crore ₹ food subsidy].

Potential consequences of such deficit.

  1. Debt-burden would increase. [Data Already 81% Debt-to-GDP.]

② Sovereign rating would decrease. ③ FDI outflow could happen. ④ Low fiscal capability for capital expenditure. [Ex Infrastructure of Railway]. ⑤ Inter-generation equity issues. ↳ debt servicing by next generation. ⑥ Crowding-out effect → leading to cost push inflation.

Measures for fiscal consolidation.

① Improving tax compliance. ↳ Digitisation. ↳ Auditing. (random) ② Reducing the revenue expenditure and more focus on capital expenditure. ③ Reducing the freebie politics and populist measure. [Subramania Balaji Judgement] ④ Privatisation of loss-making CPSEs. ⑤ Mobilising finance from disinvestment.

Close · a summary

Above steps would ensure fiscal consolidation, necessary to achieve a sustainable economic growth.