Q. According to the Economic Survey, 2022 – 23, what fiscal policy response did the Government of India undertake in response to the aggravated global supply situation ?

Correct Answer: a) Only 3

Explanation:

1. Decreasing food and fertiliser subsidies (Option 1):

This is incorrect. The Economic Survey mentions that the government continued to provide food and fertiliser subsidies to support vulnerable sections of society. In fact, free food grains were distributed to about 81.4 crore beneficiaries under the National Food Security Act, and fertiliser subsidies were maintained to ensure affordability for farmers.

2. Increasing taxes on fuel and imported products (Option 2):

This is also incorrect. The government did not increase taxes on fuel or imported products. Instead, it reduced taxes to ease inflationary pressures.

3. Reducing taxes on fuel and certain imported products (Option 3):

This is correct. The government adopted a multi-pronged approach to address inflation and supply chain disruptions. Measures included:

– Phase-wise reduction in export duty on petrol and diesel.

– Reduction in import duties on major inputs (e.g., crude and refined palm oil, crude soybean oil, crude sunflower oil).

– Waiving customs duty on cotton imports.

– Prohibition on the export of wheat products and imposition of export duties on rice.

These measures were aimed at controlling inflation and ensuring the availability of essential goods in the domestic market.

Conclusion: The correct fiscal policy response was reducing taxes on fuel and certain imported products, making a) Only 3 the correct answer.

Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1894929