AIR 123 · CSE 2022 · GS3 · 50 pages

Shreya Tyagi: GS3 answer copy

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

The questions

The answers

Question 1 · 10 marks · 130 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

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

  1. High subsidy burden → 2.5% of GDP goes in subsidies

  2. High debt burden → 2 billion of India's earnings go in debt repayments

  3. Low tax revenues → 11.6% of GDP from taxes → low tax buoyancy from 2021-22

  4. lack of scheme rationalisation

  5. Inadequate management of revenues. → leakages in system present

Diagram
- Consequence of deficit - (1) Precarious fiscal situation → can descent to instability - eg sri lanka, pakistan, etc - (2) less money for welfare measures - eg interest payments > health - (3) slippery slope to finance deficit - → new loans

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