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Fiscal Sustainability of State-Owned Enterprises

PYQs

8

Articles

1

Momentum

21

Phase IFoundation

Background

Overview

UPSC examines the role, performance, challenges, and reforms of PSUs/SOEs in the Indian economy, including issues of governance, financial health, and their impact on state budgets and public debt.

State-Owned Enterprises (SOEs) are government-owned corporations established to provide goods and services, often in strategic sectors, but frequently face challenges related to efficiency, financial viability, and political interference, impacting state fiscal health.

Phase IIStatic core

Facts & tables

Key facts

KSRTC's financial woes

Huge accumulated loss, delay in salary/pension payments.

Debt trap

Scheme exacerbates KSRTC's financial crisis, mounting unpaid fuel bills.

Austerity measures

Found inadequate to salvage the company.

Impact

Employees/pensioners resorting to legal action and extreme steps due to non-payment.

Reference table

Static syllabus anchors

TypeReference
Conceptual areaFiscal Policy & Public Debt
Conceptual areaPublic Finance & Taxation

Reference table

Institutions & roles

BodyRole
Kerala State Road Transport Corporation (KSRTC)State-owned enterprise facing fiscal crisis
Kerala State GovernmentOwner and policy-maker for ksrtc
Phase IIIExam lens

Prelims angle

Overview

Prelims angle: Multi-statement analysis

Prelims angle: Factual recall

Quick revision

  • SOEs often struggle with financial viability and accumulated losses.
  • Government welfare schemes can exacerbate SOE debt.
  • Inadequate austerity measures fail to revive ailing SOEs.
  • Fiscal distress impacts employee salaries and pensions.
  • SOE financial health is critical for state fiscal sustainability.

High-confidence PYQs

2024Statement-based questions, Conceptual understanding

Consider the following statements: Statement-I: If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be ...

EconomyOpen question
2022Statement-based questions, Conceptual understanding

With reference to the Indian economy, consider the following statements : 1. A share of the household financial savings goes towards government borrowings. ...

EconomyOpen question
2020Conceptual understanding, Multi-statement analysis

In the context of the Indian economy, non-financial debt includes which of the following? 1. Housing loans owed by households 2. Amounts outstanding on cred...

EconomyOpen question
2018Statement-based questions, Conceptual understanding

Consider the following statements 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 6...

EconomyOpen question

Consider the following statements: 1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities....

EconomyOpen question
2018Multi-statement analysis, Factual recall

Consider the following statements 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 6...

EconomyOpen question

Consider the following statements: 1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities....

EconomyOpen question
2016Multi-statement analysis, Conceptual understanding

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

EconomyOpen question
2015Conceptual understanding, Multi-statement analysis

There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? 1. Reducing ...

EconomyOpen question

With reference to Indian economy, consider the following : 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Which of the above is/are...

EconomyOpen question
2015Conceptual understanding, Policy measures

There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? 1. Reducing ...

EconomyOpen question

With reference to Indian economy, consider the following : 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Which of the above is/are...

EconomyOpen question

Topic timeline

Fiscal Policy & Public DebtPublic Finance & Taxation
Prelims 2015· Conceptual understanding, Multi-statement analysis

There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? 1. Reducing ...

Open question

With reference to Indian economy, consider the following : 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Which of the above is/are...

Open question
Prelims 2015· Conceptual understanding, Policy measures

There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? 1. Reducing ...

Open question

With reference to Indian economy, consider the following : 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Which of the above is/are...

Open question
Prelims 2016· Multi-statement analysis, Conceptual understanding

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

Open question
Prelims 2018· Statement-based questions, Conceptual understanding

Consider the following statements 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 6...

Open question

Consider the following statements: 1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities....

Open question
Prelims 2018· Multi-statement analysis, Factual recall

Consider the following statements 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 6...

Open question

Consider the following statements: 1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities....

Open question
Prelims 2020· Conceptual understanding, Multi-statement analysis

In the context of the Indian economy, non-financial debt includes which of the following? 1. Housing loans owed by households 2. Amounts outstanding on cred...

Open question
Prelims 2022· Statement-based questions, Conceptual understanding

With reference to the Indian economy, consider the following statements : 1. A share of the household financial savings goes towards government borrowings. ...

Open question
Prelims 2024· Statement-based questions, Conceptual understanding

Consider the following statements: Statement-I: If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be ...

Open question

A crisis on wheels in Kerala

09 Jul 2026 · The case of KSRTC illustrates the severe fiscal sustainability challenges faced by many State-Owned Enterprises, particularly when burdened by accumulated losses, operational inefficiencies, and the financial implications of government welfare schemes, leading to a debt trap and impacting employee welfare.

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