Question 1 · 10 marks · 130 words written
Opening · a figure
Fiscal deficit in India is at 5.6% of the GDP. The deficit has reduced from 9.2% at FY 21-22 but still is above 4% recommended by FRBM Act.
Body · points and prose
Factors contributing to high Fiscal Deficit
High subsidy burden → 2.5% of GDP goes in subsidies
High debt burden → 2 billion of India's earnings go in debt repayments
Low tax revenues → 11.6% of GDP from taxes → low tax buoyancy from 2021-22
lack of scheme rationalisation
Inadequate management of revenues. → leakages in system present
Way ahead (1) Rationalise subsidy → especially fertiliser & fossil fuels (2) increasing revenue mobilisation (3) taxation increase on corporations &
Close · a way forward
to inheretence.
Thus, the goal to become FRBM compliant by 2025 can save us from a high fiscal deficit