Which of the following statements is/are correct regarding the FRBM Act and its compliance?
1. The N.K. Singh Committee recommended a central government debt-to-GDP ratio target of 40 percent.
2. An increase in absolute debt always results in a higher debt-to-GDP ratio, regardless of the economic growth rate.

Question

Accepted Answer

A. 1 only — Statement 1 is correct as the N.K. Singh committee recommended a 60 percent overall debt-to-GDP ratio, divided into 40 percent for the Centre and 20 percent for states. Statement 2 is incorrect because the debt-to-GDP ratio can decrease even if absolute debt increases, provided the GDP (the denominator) grows at a faster rate, as highlighted in the 2023-24 CAG report.

CAG Tables FRBM Act Compliance Report 2023-24

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