Economy · 7 Aug 2026

debt-interest spiral state finance

Arrange the following institutional/legal developments in India's fugitive-recovery framework in chronological order of their introduction:

  1. Launch of BHARATPOL, the CBI-run international coordination portal
  2. Enactment of the Fugitive Economic Offenders Act
  3. BNSS Sections 355-356 permitting trial in absentia becoming effective
  4. India's extradition treaty network covering only 37 countries (pre-2014 baseline)

Select the correct order:

AA state's GSDP grows faster than its debt, automatically lowering its debt-to-GSDP ratio over time.
BA state borrows further primarily to service interest on existing debt, causing total liabilities to compound over successive years.
CA state's capital expenditure rises in direct proportion to its revenue collection each year.
DA state's interest payments decline as its own tax revenue grows relative to GSDP.
This question is based on: Tamil Nadu's Growth Numbers Hide a Debt-Interest Spiral Already in Motion
Take this in full test mode → Instructions for 7 Aug 2026
About this question

Why in news

Tamil Nadu's new TVK government's first budget confirmed the state is entering an early-stage debt-interest spiral, with a debt-to-GSDP ratio of 28% despite being India's second-largest state economy.

Why for UPSC

This tests whether candidates can distinguish GSDP growth (an economic health signal) from fiscal sustainability (a distinct measure), a conceptual distinction UPSC frequently rewards.

Prelims summary

A debt-interest spiral is a self-compounding cycle where insufficient revenue forces borrowing to pay interest, raising total debt and future interest burden - distinct from GSDP growth.

On web, answers are shown once after a test — no save or reattempt. For unlimited reattempts, Hindi medium, and Mentor Observations, use the TAN App.