Question 1

With reference to the Theory of Demographic Transition, consider the following statements:
1. Stage I is characterized by a high birth rate and a low death rate, leading to significant population growth.
2. India is currently in Stage III, marked by an ageing population.
3. A key feature of Stage III is that the population grows at a diminishing rate due to low birth and death rates.

How many of the above statements are correct?

Accepted Answer

Only one. Statement 1 is incorrect. Stage I of the demographic transition is characterized by a high birth rate and a high death rate, resulting in a stable or slowly growing population. The scenario described (high birth rate and low death rate) is characteristic of Stage II, which leads to a population explosion.
Statement 2 is incorrect. India is generally considered to be in the later phase of Stage II of the demographic transition, characterized by falling birth rates but still significant population growth. Stage III is typically associated with developed countries and features an ageing population structure.
Statement 3 is correct. Stage III is defined by both low birth rates and low death rates. As the gap between birth and death rates narrows significantly, the net addition to the population is small, leading to population growth at a diminishing rate, eventually stabilizing.
Since only one statement is correct, the correct option is 'a'.

Question 2

Consider the following statements regarding the Optimum Theory of Population:

Statement-I: In a country experiencing 'Under Population', any increase in its population size will lead to a decrease in the per capita income.

Statement-II: The Optimum Theory of Population posits that for a given level of technology and resources, there exists a population size that corresponds to the highest possible per capita income.

Which one of the following is correct in respect of the above statements?

Accepted Answer

Statement-I is incorrect but Statement-II is correct. Statement-I is incorrect. In the 'Under Population' phase, the available resources are not being fully utilized. An increase in population (labour) would lead to more efficient use of these resources, resulting in an increase, not a decrease, in per capita income, moving the economy towards the optimum point. Statement-II is correct. This is the central premise of the Optimum Theory. It defines the optimum population as the specific size that yields the maximum income per head, given the country's resources and technological capabilities.

Question 3

Consider the following statements regarding population theories:
1. The Malthusian theory identifies the overall environment as the primary constraint on population, whereas the Zero Population Growth theory focuses specifically on food supply.
2. The Optimum Theory of Population posits that the ideal population level is one that secures maximum income per head and is characterized by full employment.
3. The Zero Population Growth (ZPG) theory proposes that population stability is achieved when the birth rate equals the death rate, without considering the effects of migration.

How many of the above statements are correct?

Accepted Answer

Only one. To determine the correct option, we must evaluate each statement:
- **Statement 1 is incorrect.** The statement reverses the core constraints of the two theories. The Malthusian theory specifically focuses on the arithmetic growth of food supply as the primary check on geometric population growth. Conversely, the modern Zero Population Growth (ZPG) concept broadens the concern beyond just food to the overall environmental carrying capacity.
- **Statement 2 is correct.** The Optimum Theory of Population argues that there is an ideal population size for a country which, given its natural resources and technology, yields the maximum per capita income. Achieving full employment is considered a key characteristic of this optimal economic state.
- **Statement 3 is incorrect.** Zero Population Growth is a state of demographic balance where a population remains stable. This is achieved when the number of births plus immigrants equals the number of deaths plus emigrants. The statement is flawed because it incorrectly excludes migration, which is an essential component of the ZPG equation.

Since only one statement (Statement 2) is correct, the correct option is 'a'.

Question 4

With reference to the causes of population dynamics in India, consider the following statements:
1. A high dependency on agriculture using primitive methods is cited as a reason for a high birth rate.
2. The establishment of Integrated Child Development Services (ICDS) centres in rural areas has contributed to a high birth rate.
3. The spread of improved sanitation and hygiene has been a factor in lowering the death rate.
How many of the above statements are correct?

Accepted Answer

Only two. Statement 1 is correct. The text states that in agriculture using primitive methods, having more children fulfils labour demand, which provides a rationale for a bigger family and thus a high birth rate. Statement 2 is incorrect. The text explicitly lists the establishment of ICDS centres as a cause for a 'low death rate', not a high birth rate. This is a classification swap. Statement 3 is correct. The text mentions that the spread of improved sanitation and hygiene has helped protect against diseases, contributing to a lower death rate. Therefore, only two statements (1 and 3) are correct.

Question 5

Consider the following statements:
Statement-I: The proportion of India's population aged 60 years and above is projected to increase significantly by the year 2036.
Statement-II: This demographic shift is explained by a projected decline in the proportion of the population under 15 years, which is a consequence of declining fertility.
Which one of the following is correct in respect of the above statements?

Accepted Answer

Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I.. Statement-I is correct. Demographic projections for India show a clear trend of an ageing population, with the proportion of individuals aged 60 and above expected to increase significantly by 2036. This is a well-established demographic forecast. Statement-II is also correct. This ageing trend is primarily driven by a sustained decline in fertility rates over the past decades. Lower fertility directly results in a smaller cohort of young people, thus reducing the proportion of the population under the age of 15. As the base of the population pyramid (the younger age groups) shrinks, the relative proportion of the upper sections (the older age groups) naturally increases. Therefore, the phenomenon described in Statement-II (declining fertility leading to a smaller under-15 population) is the correct explanation for the trend mentioned in Statement-I (a rising proportion of the 60+ population).

Question 6

Consider the following statements regarding population trends and related policies in India:
1. The Pre-Conception and Pre-Natal Diagnostic Techniques (PC & PNDT) Act is primarily aimed at promoting family planning and smaller family sizes.
2. India's population growth since independence is exclusively due to a high birth rate.
3. The text indicates that India is in the later phase of Stage II of demographic transition.
How many of the above statements are correct?

Accepted Answer

Only one. Statement 1 is incorrect. The text states that the PC & PNDT Act has helped in the 'reduction of sex selection and girl child mortality', not general family planning. This is a misattribution of the Act's primary purpose. Statement 2 is incorrect. The use of the word 'exclusively' makes this an exclusion trap. The text clearly states that 'a high birth rate and a low death rate are prevalent for the increase in population'. Statement 3 is correct. The text explicitly mentions, after presenting the census data, that 'This data also clearly shows that India is in the later phase of Stage II of demographic transition.' Therefore, only one statement is correct.

Question 7

Consider the following statements regarding population pyramids:

1. An Expansive population pyramid is characterized by a lower death rate, lower birth rate, and longer life expectancy.
2. A Stationary population pyramid indicates that the birth rate is equal to the death rate, resulting in a constant population percentage over time.
3. A Constructive population pyramid is typically wider at the younger age groups, indicating a high birth rate.

How many of the above statements are correct?

Accepted Answer

Only one. To determine the correct option, each statement must be evaluated:

*   **Statement 1 is incorrect.** An Expansive population pyramid has a wide base and narrow top, reflecting a high birth rate, high death rate, and shorter life expectancy. The characteristics mentioned (lower death rate, lower birth rate, longer life expectancy) actually describe a Constrictive/Constructive pyramid.
*   **Statement 2 is correct.** A Stationary population pyramid has a rectangular or beehive shape, where the birth rate is approximately equal to the death rate. This leads to a stable population with a relatively constant percentage across age groups.
*   **Statement 3 is incorrect.** A Constructive population pyramid is narrower at the bottom, which indicates a low birth rate and an aging population. A pyramid that is wider at the younger age groups is characteristic of an Expansive pyramid.

Since only one statement (Statement 2) is correct, the correct option is 'a'.

Question 8

Consider the following two statements:

Statement-I: India's low total dependency ratio, which is below the world average, indicates a high potential for its economic growth.

Statement-II: India's demographic structure is best represented by a Constructive population pyramid, where the percentage of the older population is relatively higher.

Which one of the following is correct in respect of the above statements?

Accepted Answer

Statement-I is correct but Statement-II is incorrect.. Statement-I is correct. A low total dependency ratio means a smaller proportion of the population is dependent (children and elderly) on the working-age population. This scenario, known as the 'demographic dividend', presents a significant opportunity for economic growth. A larger workforce can increase production and national income, while also potentially leading to higher savings and investment rates, which are crucial for long-term economic expansion. Statement-II is incorrect. India's demographic profile, with a large base of young people and a substantial working-age population, is characteristic of an Expansive population pyramid, not a Constructive one. A Constructive (or Constrictive) pyramid features a narrower base and a larger proportion of older individuals, which corresponds to an aging population and a higher dependency ratio. Therefore, Statement-I is correct, but Statement-II is incorrect.

Question 9

With reference to the measures to check population explosion, consider the following statements:
1. Expansion of Industries is classified as a Social Measure.
2. Improving the Status of Women is categorized as an Economic Measure.
3. Reduction of Income Inequality is considered an Economic Measure.
How many of the above statements are correct?

Accepted Answer

Only one. Statement 1 is incorrect. The expansion of industries is classified as an economic measure, not a social one. Industrial growth creates employment and promotes urbanization, which are economic shifts that typically lead to smaller family norms. Statement 2 is incorrect. Improving the status of women is a key social measure for population control. Enhanced education and autonomy for women are social changes that empower them to make independent decisions about family size, often resulting in lower fertility rates. Statement 3 is correct. The reduction of income inequality is considered an economic measure. A more equitable distribution of wealth can change people's perspectives on family size, reducing the perceived need for many children as a form of economic security. Therefore, only one statement is correctly classified.

Question 10

Consider the following statements:
Statement-I: The family planning policies of the 1950s, which primarily followed a clinical approach, did not achieve the expected results in controlling population growth.
Statement-II: By the 1980s, policymakers concluded that family planning is a by-product of economic growth and that broader economic conditions must be improved to control population growth.
Which one of the following is correct in respect of the above statements?

Accepted Answer

Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I.. Statement-I is correct. The family planning program initiated in the 1950s adopted a clinical approach, focusing on providing contraceptive services. This strategy did not significantly curb population growth, as evidenced by the higher-than-expected growth rate recorded in the 1961 Census. Statement-II is also correct. The limited success of earlier policies led to a paradigm shift by the 1980s. Policymakers concluded that narrow family planning initiatives were insufficient and that population stabilization is a consequence of broader socio-economic development. The realization described in Statement-II—that family planning is a by-product of economic growth—is the direct result of the failure of the narrower, clinical approach mentioned in Statement-I. This makes Statement-II the correct explanation for the policy evolution.

Question 11

Consider the following statements regarding the National Population Policy, 2000:
1. It established a National Commission on Population to be chaired by the Prime Minister.
2. A medium-term objective was to reduce the Total Fertility Rate to the replacement level of 2.1 children per woman.
3. Its long-term objective was to achieve population stabilisation by the year 2045.
How many of the above statements are correct?

Accepted Answer

All three. Statement 1 is correct. The text states that a feature of the National Population Policy, 2000 was the 'Establishment of a National Commission on Population to provide overall guidance for population stabilisation (chaired by the Prime Minister)'. Statement 2 is correct. The policy's 'medium-term goal was to keep the Total Fertility Rate (TFR) at 2.1 children per woman (Replacement level)'. Statement 3 is correct. The policy's 'long-term objective was population stabilisation by 2045'. Therefore, all three statements are correct as per the provided text.

Question 12

Consider the following statements:

Statement-I: Critics of population control legislation argue that India's Total Fertility Rate (TFR) has already fallen below the replacement level fertility.

Statement-II: A TFR below the replacement level is associated with a shrinking young population, potentially leading to a higher tax burden on the working-age population in the future to support an aging populace.

Which one of the following is correct in respect of the above statements?

Accepted Answer

Both Statement-I and Statement-II are correct but Statement-II is not the correct explanation for Statement-I.. Statement-I is correct. The Total Fertility Rate (TFR) is the average number of children a woman would have. Replacement level fertility is the TFR at which a population exactly replaces itself, which is approximately 2.1. According to the NFHS 2019-21 data, India's TFR has declined to 2.0, which is below the replacement level. Statement-II is also correct. A TFR below the replacement level can lead to negative population growth and an aging population. This results in a smaller base of young, working-age people, who would face a higher tax rate to support the larger, dependent elderly population. However, Statement-II describes a potential long-term economic consequence of the situation mentioned in Statement-I; it does not explain *why* critics make the argument. The critics' argument is based on the factual data of TFR being below the replacement level, making coercive legislation unnecessary.

Question 13

With reference to the Population Regulation Bill, 2019, consider the following statements:

1. The Bill was introduced by the Government of India and makes a two-child policy mandatory for all citizens.
2. It proposes to disqualify any citizen with more than two children from being elected as a Member of Parliament, with no exemptions provided.
3. One of the proposed incentives for Central Government employees adopting the norm is a 12-week paternity leave.

How many of the above statements are correct?

Accepted Answer

Only one. The Population Regulation Bill, 2019, was introduced as a private member's bill, not by the Government of India, and its proposed two-child policy is not universally mandatory for all citizens. The proposal to disqualify a person with more than two children from being elected as a Member of Parliament includes an exemption for those who had more than two children before the commencement of the Act. However, the bill does propose several incentives for Central Government employees who adopt the norm, including a 12-week paternity leave. As only the third statement is accurate, the correct count of correct statements is one. This makes the option 'Only one' correct and renders the options 'Only two', 'All three', and 'None' incorrect.

Question 14

Consider the following provisions as proposed in the Population Regulation Bill, 2019:

1. A government employee adopting the two-child norm would receive a 2% increase in their personal contribution under the pension scheme.
2. Citizens with more than two children would face higher than normal interest rates when availing loans from financial institutions.
3. A single girl child would be eligible for free education up to the post-graduation level.

How many of the above statements are correct?

Accepted Answer

Only one. Statement 1 is incorrect. The bill proposes a 2% increase in the *employer's* contribution to the pension scheme, not the employee's personal contribution. This is a benefit to the employee, not an increased liability. Statement 2 is correct. The bill outlines several disincentives for having more than two children, which includes facing higher than normal rates for availing loans from any financial institution. Statement 3 is incorrect. The bill proposes free education up to the *graduation* level and a scholarship for studies *beyond* the graduation level for a single girl child, not free education up to the post-graduation level itself.

Question 15

Consider the following statements regarding sex ratios in India based on the provided data:

1. The Female-Male Ratio (FMR) in India has shown a continuous and uninterrupted decline from the 1951 census to the 2011 census.
2. The Child Sex Ratio (CSR) in India registered a decline between the census years 2001 and 2011.
3. As per the National Family Health Survey 5 (2019-21), India's FMR has surpassed the value of 1.0.

How many of the above statements are correct?

Accepted Answer

Only two. Statement 1 is incorrect. The provided table shows that the Female-Male Ratio (FMR) did not experience an uninterrupted decline. For instance, it increased from 0.930 in 1971 to 0.934 in 1981, and again from 0.933 in 2001 to 0.940 in 2011. The trend has been fluctuating, not continuously declining. Statement 2 is correct. The text explicitly states that the Child Sex Ratio (CSR) declined from 927 in 2001 to 919 in 2011. Statement 3 is correct. The text mentions that according to NFHS 5 (2019-21), the current FMR is 1.020, which is greater than 1.0. Therefore, only two statements are correct.

Question 16

With reference to the regional variations and causes of low Female-Male Ratio (FMR) in India, consider the following statements:

1. States with higher economic growth, such as Punjab and Haryana, are noted to have a sex ratio that is also higher than the all-India sex ratio.
2. The BIMARU states (Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh) are characterized by a lower sex ratio when compared to the national average.
3. A high proportion of the population engaged in agriculture is considered a contributing factor to low FMR, as a male child is often perceived as more helpful in increasing production.

How many of the above statements are correct?

Accepted Answer

Only two. Statement 1 is incorrect. States with high economic growth and per capita income, such as Punjab and Haryana, paradoxically exhibit some of the lowest sex ratios in the country, falling below the national average. Statement 2 is correct. The BIMARU states (Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh) are generally associated with lower socio-economic indicators and have historically recorded sex ratios lower than the all-India average. Statement 3 is correct. In agrarian economies, a strong preference for male children often exists because they are perceived as more valuable for agricultural labor and for continuing the family lineage, which contributes to a lower Female-Male Ratio. Since statements 2 and 3 are correct, the correct option is 'b'.

Question 17

Consider the following statements regarding measures to address low sex ratios in India:

1. The Pre-Conception and Pre-Natal Diagnostic Techniques (PC & PNDT) Act has been fully and successfully implemented, leading to the eradication of female foeticide.
2. The Kanyashree scheme is a centrally sponsored Government of India initiative providing financial assistance to girl children across all states.
3. The establishment of ICDS centers and reservation of seats for women in legislative bodies are cited as government initiatives to improve the FMR.

How many of the above statements are correct?

Accepted Answer

Only one. Statement 1 is incorrect. The text explicitly mentions the 'Failure of administration in the full-fledged implementation' of the PC & PNDT Act as a cause for low FMR, indicating it has not been fully successful. Statement 2 is incorrect. The text identifies the Kanyashree scheme as an example of a state-level program, specifically mentioning it is 'in West Bengal', not a centrally sponsored scheme for all states. Statement 3 is correct. The passage lists the establishment of ICDS centers and the reservation of seats for women in legislative bodies as measures taken by the government to improve FMR and CSR. Therefore, only one statement is correct.

Question 18

Consider the following statements regarding the economic implications of a demographic dividend:

1. An increasing demographic dividend typically leads to higher government expenditure on subsidies and social services.
2. A rising share of the working-age population often necessitates an increase in tax rates to fund social security.
3. A higher demographic dividend results in a reduction of the surplus available for investment due to increased aggregate consumption.

How many of the above statements are correct?

Accepted Answer

None. Statement 1 is incorrect. The text states that with a demographic dividend, the government will be able to invest more in productive activities and 'reduce its expenditure on subsidies and social services'. Statement 2 is incorrect. The text mentions that 'Lowering taxes may also be one of the benefits' when the demographic window increases, because the proportion of the working-age population also increases. Statement 3 is incorrect. The text explicitly states, 'The higher the demographic dividend, the larger the surplus available for investment for a country, which results in wealth accumulation'.

Question 19

Consider the following statements regarding the Dependency Ratio:

1. The dependency ratio is calculated as the ratio of the population in the age group 0-14 and 60 and above to the working population in the age group 15-64 years.
2. A continuous decrease in the dependency ratio is considered a concerning indicator for an economy's growth prospects.
3. According to World Bank data, India’s dependency ratio has steadily increased from 1970 to 2021.

How many of the above statements are correct?

Accepted Answer

None. All three statements are incorrect. 
1. Statement 1 is incorrect. The dependency ratio is calculated using the working-age population as the denominator. The specific calculation defines the working population as those in the 15-59 age group, not 15-64 years.
2. Statement 2 is incorrect. A decreasing dependency ratio is a positive economic indicator, often associated with a 'demographic dividend.' It means there are more working individuals relative to dependents, which can boost savings, investment, and economic growth. It is a favorable trend, not a concerning one.
3. Statement 3 is incorrect. India’s dependency ratio has significantly decreased, not increased, over the period mentioned. It fell from approximately 79.3 in 1970 to around 48 in 2021, indicating a growing share of the working-age population.

Question 20

Consider the following two statements:

Statement-I: The United Nations Population Fund (UNFPA) warned in its 2024 report, 'Jobs for Resilience', that South Asia is unable to fully utilise its demographic dividend.

Statement-II: The primary mandate of the UNFPA is to promote skill development and generate sufficient jobs to sustain the young population in member countries.

Which one of the following is correct in respect of the above statements?

Accepted Answer

Both Statement-I and Statement-II are incorrect. Statement-I is incorrect. The text attributes the South Asia regional update, 'Jobs for Resilience' (2024), to the World Bank, not the United Nations Population Fund (UNFPA). Statement-II is incorrect. The text specifies that the aim of UNFPA is to 'safeguard sexual and reproductive rights for all, especially women and young people', not to primarily promote skill development and job generation. Therefore, both statements are incorrect.

Question 21

Consider the following statements regarding the contemporary discourse on India's population strategy:

1. India's Total Fertility Rate (TFR) has consistently remained above the replacement level, necessitating stricter population control measures.
2. The primary demographic challenge driving new policy considerations is the prospect of a shrinking workforce and an aging population.
3. New strategies are primarily focused on managing resource scarcity caused by accelerating population growth rates across all states.

How many of the above statements are correct?

Accepted Answer

Only one. Statement 1 is incorrect. India's TFR is 2.0, which is below the replacement level of 2.1, indicating a shift away from the need for stricter controls. Statement 2 is correct. Concerns about a declining TFR, a future shrinking workforce, and an aging population are the key drivers for rethinking population strategy. Statement 3 is incorrect; while resource management is a concern, the new discourse is shifting focus from issues of high growth to challenges of an aging demographic and declining fertility.

Question 22

With reference to proposals for linking population norms to government benefits, consider the following statements:

1. Providing preferential admission in educational institutions for a single child has been proposed as an incentive.
2. A reduction in benefits under the Public Distribution System has been suggested as a disincentive for not adhering to the norm.
3. An additional service increment for adhering to the two-child norm was proposed for all working citizens.

Which of the statements given above is/are correct?

Accepted Answer

1 and 2 only. Statement 1 is correct; proposals include benefits like preferential admission for a single child. Statement 2 is also correct; disincentives like reduced PDS benefits have been part of the legislative discussion. Statement 3 is incorrect because the proposed benefit of an additional service increment was specifically for Central Government and central public sector enterprise (PSE) employees, not for 'all working citizens'.

Question 23

Examine the following statements:

Statement-I: A sustained decline in a country's Total Fertility Rate (TFR) below the replacement level can pose a significant long-term challenge to its economic growth potential.

Statement-II: A declining TFR invariably and immediately improves economic outcomes by reducing the overall dependency ratio of the population.

Which one of the following is correct in respect of the above statements?

Accepted Answer

Statement-I is correct but Statement-II is incorrect. Statement-I is correct. A TFR below replacement level can lead to a shrinking workforce and an aging population, which strains social security and can hinder economic growth. Statement-II is incorrect. While a declining TFR may initially lower the youth dependency ratio, it eventually leads to an aging population, which increases the old-age dependency ratio. The effect is not 'invariably' or 'immediately' positive for the economy, and the overall dependency ratio may increase in the long run.

Question 24

With reference to recent trends in India's employment structure, consider the following statements:

1. The share of the workforce engaged in the agriculture sector has shown a consistent decline.
2. The proportion of self-employed workers in the total workforce has increased.
3. The employment share of the manufacturing sector has decreased despite economic growth.

Which of the statements given above is/are correct?

Accepted Answer

2 and 3 only. Statement 1 is incorrect. Recent data indicates a slight increase in agriculture's employment share, reversing the long-term structural transformation trend. Statement 2 is correct, as the proportion of self-employed individuals has risen. Statement 3 is correct; the manufacturing sector's share in employment has declined, indicating a growth-employment mismatch.

Question 25

Consider the following statements regarding India's labour market:

Statement-I: Recent trends show a significant increase in India’s Female Labour Force Participation Rate (FLFPR).

Statement-II: This increase is primarily driven by the large-scale creation of high-quality, formal sector jobs, resolving issues of underemployment.

Which one of the following is correct in respect of the above statements?

Accepted Answer

Statement-I is correct but Statement-II is incorrect.. Statement-I is correct as recent data confirms a notable rise in the FLFPR. Statement-II is incorrect because while participation has increased, it is not exclusively due to high-quality formal jobs; challenges like informality, low wages, and underemployment persist.

Question 26

To effectively convert a demographic dividend into sustainable economic development, which of the following are considered essential pre-conditions?

1. Increasing the share of the population above 60 years to leverage their experience.
2. Enhancing the formalization of the economy.
3. Prioritizing capital-intensive industries to accelerate GDP growth.
4. Improving the female labour force participation rate.

How many of the above statements are correct?

Accepted Answer

Only two. Statement 1 is incorrect; a rising elderly population increases the dependency ratio, which is a challenge to the dividend. Statement 3 is incorrect; prioritizing capital-intensive sectors can cause jobless growth, which squanders the dividend. Statements 2 and 4 are correct as formalization and higher female participation are crucial for creating quality employment and expanding the workforce.

Question 27

With reference to the fiscal health of states in India, consider the following statements:
1. The consolidated debt of States, as a percentage of GDP, has shown a continuous and uninterrupted increase since the pandemic peak.
2. States' reliance on market borrowings to finance their gross fiscal deficit has significantly decreased in recent years.
3. Despite rising debt levels, the interest payment burden for states has remained largely stable as a percentage of their GSDP.
Which of the statements given above is/are correct?

Accepted Answer

3 only. Statement 1 is incorrect. The consolidated debt of states declined from its pandemic peak (March 2021) before being budgeted to rise again, so the increase was not continuous. Statement 2 is incorrect. States' reliance on market borrowings has increased, financing a majority (around 76%) of their gross fiscal deficit. Statement 3 is correct. The interest payment to GSDP ratio has been stable, aided in part by concessional loans from the Centre.

Question 28

In the context of India's demographic transition and state finances, consider the following statements:
1. States with a younger median age are advised to prioritize fiscal strategies focused on healthcare and pension reforms.
2. The primary source of financing for the states' Gross Fiscal Deficit is now concessional loans from the Centre.
3. States' own tax revenue base is highly concentrated, with State GST, sales tax, and stamp duties being major components.
How many of the statements given above are correct?

Accepted Answer

Only one. Statement 1 is incorrect. This is a classification swap; youthful states should prioritize education and job creation, while ageing states focus on healthcare and pensions. Statement 2 is incorrect. Market borrowings, not central loans, are the primary source, financing about 76% of the states' Gross Fiscal Deficit. Statement 3 is correct. The states' own tax base is concentrated, with SGST, sales tax, excise, and stamp duties constituting approximately 90% of collections.

Question 29

Consider the following statements regarding state government finances in India.
Statement-I: States have been actively creating dedicated reserve funds to improve their debt management and redemption profile.
Statement-II: The Consolidated Sinking Fund, a key fiscal buffer, is managed by the Central Government and requires mandatory contributions from all states.
Which one of the following is correct in respect of the above statements?

Accepted Answer

Statement-I is correct but Statement-II is incorrect.. Statement-I is correct. Recent reports indicate that states are building fiscal buffers through mechanisms like the Consolidated Sinking Fund (CSF) and Guarantee Redemption Fund (GRF). Statement-II is incorrect. The Consolidated Sinking Fund is a reserve fund maintained by the respective states with the Reserve Bank of India, not the Central Government. The participation and contribution norms are not uniform or universally mandatory in the manner described.

Population and Demographic Dividend

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