Which of the following will help India advance towards Fiscal consolidation 1.Enhancing Tax -GDP ratio 2.Direct benefit transfer schemes 3.Government evoking use of escape clause under Fiscal Responsibility and Budget Management (FRBM) act,2003 Select the correct answer using the code given below:

[A] 1 and 2 only

[B] 2 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: A

Notes:

Statement 1 is correct– Enhancing Tax-GDP ratio by widening tax base and minimising tax concessions and exemptions will improve tax revenues, which will lower the budget deficit and borrowing by the government.
Statement 2 is correct-Using Direct benefit transfer for schemes and giving subsidies will lead to better targeting and reduced leakage.
Statement 3 is incorrect– Escape clause provides flexibility to the government to overshoot the fiscal deficits targets in times of need. Its frequent revocation means that government is not been able to lower its fiscal deficit or that there have been lot of economic shocks that have warranted the use of this clause, both of which are not suitable for long term fiscal consolidation.