Previous Year Question

According to the Economic Survey 2022-23, after the Russia-Ukraine conflict aggravated global commodity prices and supply disruptions, the Government of India adopted several fiscal measures to moderate their inflationary impact on the domestic economy.

Statement 1 is incorrect. The Government did not respond by reducing food and fertiliser subsidies.

On the contrary, rising international prices of food and fertilisers increased the subsidy burden. The Economic Survey noted that the geopolitical conflict raised international prices of food, fertiliser and fuel and placed additional pressure on subsidy expenditure during FY 2022-23.

Statement 2 is incorrect. The Government did not respond by increasing taxes on fuel and imported products.

Statement 3 is correct. To reduce inflationary pressure, the Government cut Central Excise Duty on petrol and diesel. In May 2022, excise duty was reduced by ₹8 per litre on petrol and ₹6 per litre on diesel. The Economic Survey records this among the fiscal measures taken in response to the price shock.

In addition, customs/import duties on several imported commodities and inputs were reduced or rationalised. These included duty reductions relating to pulses, edible oils and certain industrial raw materials. Customs duty on cotton imports was also waived for a specified period.

The purpose was to moderate imported inflation and improve the domestic availability of essential commodities and production inputs.