The correct answer is (c) 68 percent.
The Thirteenth Finance Commission (TFC) was constituted by the Government of India in January 2009 to recommend the devolution of central taxes and duties to the states for the period 2010-11 to 2014-15. The TFC submitted its report in December 2009.
The TFC recommended that the combined debt-GDP ratio of the Centre and the States by year 2014-15 should be 68 percent. This was lower than the 70 percent target set by the Twelfth Finance Commission (Twelfth FC). The TFC argued that a lower debt-GDP ratio would help to improve the fiscal health of the Centre and the States.
The TFC’s recommendations were accepted by the Government of India. The Government has taken a number of steps to reduce the fiscal deficit and the debt-GDP ratio. These steps include:
- Increasing the tax-to-GDP ratio
- Reducing the expenditure-to-GDP ratio
- Raising the prices of petroleum products
- Selling off government assets
The Government’s efforts have helped to reduce the fiscal deficit and the debt-GDP ratio. However, the debt-GDP ratio is still high. The Government needs to continue to take steps to reduce the debt-GDP ratio.
The other options are incorrect. Option (a) is incorrect because the TFC recommended that the combined debt-GDP ratio of the Centre and the States by year 2014-15 should be 68 percent, not 76 percent. Option (b) is incorrect because the TFC recommended that the combined debt-GDP ratio of the Centre and the States by year 2014-15 should be 68 percent, not 70 percent. Option (d) is incorrect because the TFC recommended that the combined debt-GDP ratio of the Centre and the States by year 2014-15 should be 68 percent, not 66 percent.