Centrally Sponsored Schemes (CSS)

Statement 1 is correct: A portion of household financial savings in India does indeed go towards government borrowings. The government raises funds through various debt instruments like bonds and treasury bills. When households save money, they might invest it in these government debt instruments through banks or other financial institutions. This provides a source of funding for the government while offering a return to the investors (savers). Statement 2 is correct: Dated securities are a major component of India's internal debt. These are essentially government bonds issued at market-determined interest rates through auctions. Investors, including households, banks, and financial institutions, can participate in these auctions and purchase dated securities. Hence, both statements are correct.

The National Development Council (NDC) in India is comprised of the following members: * The Prime Minister (who chairs the council)
* Ministers of the Union Cabinet
* Chief Ministers of the States The Chairman, Finance Commission - while the Finance Commission plays a crucial role in recommending the devolution of financial resources from the central government to the states, the Chairman is not a member of the NDC. _Note: While the NDC was proposed to be abolished, it has not been formally dissolved, although its powers have largely been transferred to the NITI Aayog's Governing Council._

Statement 1 is correct. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report indeed recommended a debt-to-GDP ratio of 60% for the general (combined) government by 2023, with 40% for the Central Government and 20% for the State Governments. This recommendation aimed to ensure fiscal discipline and sustainability. Statement 2 is not correct. The Central Government has domestic liabilities of 46.1% of GDP (2016-17) and as a percentage of GDP, States liabilities increased to 23.2 per cent at end-March 2016. Statement 3 is correct. The Constitution of India empowers State Governments to borrow only from domestic sources (Article 293(1)). Further, as long as a State has outstanding borrowings from the Central Government, it is required to obtain the Central Government's prior approval before incurring debt (Article 293 (3)).

Statement 1 is incorrect: The National Development Council (NDC) is not an organ of the Planning Commission. It's an independent advisory body headed by the Prime Minister and includes Chief Ministers of all states, Union Cabinet Ministers, and members of the NITI Aayog (successor to the Planning Commission). It was set up on 6 August 1952. Statement 2 is correct: Economic and Social Planning is listed in the Concurrent List (List III) of the Seventh Schedule of the Indian Constitution. Statement 3 is correct: The Constitution (Article 243G) empowers Panchayats (local village governments) to prepare plans for economic development and social justice at the village level. This promotes decentralized planning and community participation. Hence, statement one is incorrect and statements two and three are correct. _Note: While the NDC was proposed to be abolished, it has not been formally dissolved, although its powers have largely been transferred to the NITI Aayog's Governing Council._

Statement 1 Incorrect: An amendment to the Constitution of India can be initiated by the introduction of a bill in either house of Parliament, the Lok Sabha or the Rajya Sabha. Statement 2 Incorrect: If an amendment seeks to make changes in the federal character of the Constitution, the amendment requires ratification by the legislatures of at least half of the States of India. This is a special provision to ensure a wider consensus for changes affecting the balance of power between the center and the states.

The Hilton-Young Commission (1926), officially known as the Royal Commission on Indian Currency and Finance, recommended fixing the rupee-sterling exchange rate at an artificially high ratio of 1s 6d (1 shilling 6 pence) per rupee, instead of the pre-war rate of 1s 4d. Option A is correct: The colonial administration adopted this artificially high rate primarily to ease the burden of "Home Charges." These were massive, mandatory sterling-denominated remittances sent from India to Britain to cover administrative costs, pensions, military expenses, and interest on public debt. By keeping the rupee artificially strong against the sterling, the Government of India had to extract fewer rupees from the domestic economy to purchase the sterling required for these remittances. This facilitated the steady flow of funds to Britain and ensured India could easily service its sterling debt, thereby maintaining its financial creditworthiness in London. Option B is incorrect: While an overvalued rupee did make imports cheaper (benefiting British manufacturers like Lancashire textiles), the primary motive of the British Government was to manage its own fiscal burden regarding remittances, not to provide support to Indian importers. Option C is incorrect: The artificially high exchange rate actually harmed Indian exports. It made Indian goods, such as cotton produce, more expensive and uncompetitive in the international market, which sparked intense opposition from Indian nationalists and businessmen during the "Ratio Controversy." Option D is incorrect: The primary objective of fixing the exchange rate at 1s 6d was to facilitate the transfer of sterling remittances (Home Charges) to Britain and manage the colonial government's budget, rather than merely preventing the depreciation of the Rupee in terms of gold. Therefore, the correct option is A.

* Statement-I:  This statement is correct. If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds would not be able to exercise their claims to receive payment. This statement is correct because, in the event of a default, the government would not be able to fulfil its debt obligations, meaning bondholders would not receive the payments they are due. * Statement-II: This statement is correct. The US government debt is not backed by any hard assets, but only by the faith of the Government. This statement is also correct. US Government debt, such as Treasury Bonds, is backed by the full faith and credit of the US Government rather than any specific physical assets. * Statement II explains Statement I because the faith and credit of the US Government are the guarantees behind its debt. If this faith is shaken or if the government defaults, bondholders cannot claim any specific assets to recover their investment, hence they would not receive their payments.

The UDAY scheme (Ujwal DISCOM Assurance Yojana), launched by the Government of India in 2015, has multiple objectives aimed at improving the financial health and operational efficiency of electricity distribution companies (DISCOMs) in India.

In India, deficit financing is used to raise resources for meeting the government's expenditure requirements when its revenue or receipts fall short of its planned expenditures. In other words, deficit financing is a way for the government to finance its budget deficit to stimulate economic growth.

To reduce a persistent budget deficit, the government can take actions that decrease spending or increase revenue. 1. Reducing revenue expenditure (Correct): This involves cutting back on non-essential government spending. This can include areas like administrative costs, travel, or certain subsidies. 2. Introducing new welfare schemes (Incorrect): This would likely increase government spending and worsen the deficit. 3. Rationalizing subsidies (Correct): Subsidies can be a significant source of government expenditure. Reviewing and potentially reducing or reforming subsidies can help control spending. 4. Expanding industries (Depends): While industrial expansion can lead to increased tax revenue in the long run, it might not have an immediate impact on the budget deficit. In the short term, the government might need to invest in infrastructure to support expansion, potentially increasing expenditure. Therefore, the correct answer is 1 and 3 only (Reducing revenue expenditure and Rationalizing subsidies).