- Statement I is false: Data shows that the consolidated fiscal deficit of the States in India during 2017-2018 (Revised Estimates) was around 2.8% of GSDP, which was below the FRBM threshold level of 3%. It had been slightly above 3% in some preceding years, but fell back below in 2017-18. - Statement II is true: Available data for 2017-2018 indicates that Special Category States, facing unique developmental challenges and revenue constraints, did generally run up a higher level of fiscal deficit in 2017-2018 compared to 2016-2017, often exceeding the 3% limit.
Statement I: The overall fiscal deficit of the States in India during 2017-2018 stayed above the FRBM threshold level of 3 percent for the third successive year. Statement II: Special Category States had run up a higher level of fiscal deficit in 2017-2018 compared to 2016-2017.
Asked in UPSC CDS 2 2018 · Topic: Fiscal Policy & Revenue (Fiscal Responsibility and Budget Management (FRBM) Act)
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Answer: B. Both the statements are individually true but Statement II is not the correct explanation of Statement I
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