Fiscal Policy & Budget — UPSC Prelims Previous Year Questions

Q: Which one of the following best describes the 'Crowding Out Effect' in the context of fiscal policy ?

Q: Consider the following statements: I. Capital receipts create a liability or cause a reduction in the assets of the Government. II. Borrowings and disinvestment are capital receipts. III. Interest received on loans creates a liability of the Government. Which of the statements given above are correct?

Q: A country’s fiscal deficit stands at 50,000 crores. It is receiving 10,000 crores through non-debt creating capital receipts. The country’s interest liabilities are € 1,500 crores. What is the gross primary deficit?

Q: Which of the following statements with regard to recommendations of the 15th Finance Commission of India are correct? I. It has recommended grants of ₹ 4,800 crores from the year 2022-23 to the year 2025-26 for incentivizing States to enhance educational outcomes. II. 45% of the net proceeds of Union taxes are to be shared with States. III. ₹ 45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms. IV. It re-introduced tax-effort criteria to reward fiscal performance. Select the correct answer using the code given below.

Q: Consider the following: 1. Demographic performance 2. Forest and ecology 3. Governance reforms 4. Stable government 5. Tax and fiscal efforts For the horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population area and income distance?

Q: Consider the following statements : The 'Stability and Growth Pact' of the European Union is a treaty that 1. limits the levels of the budgetary deficit of the countries of the European Union 2. makes the countries of the European Union to share their infrastructure facilities 3. enables the countries of the European Union to share their technologies How many of the above statements are correct?

Q: With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct? 1. Acquiring new technology is capital expenditure. 2. Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure. Select the correct answer using the code given below:

Q: With reference to the Indian economy, consider the following statements: 1. A share of the household financial savings goes towards government borrowings. 2. Dated securities issued at market-related rates in auctions form a large component of internal debt. Which of the above statements is/are correct?

Q: Which among the following steps is most likely to be taken at the time of an economic recession?

Q: The money multiplier in an economy increases with which one of the following?

Q: Along with the Budget, the Finance Minister also places other documents before the Parliament which include 'The Macro Economic Framework Statement'. The aforesaid document is presented because this is mandated by

Q: 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 credit cards 3. Treasury bills Select the correct answer using the code given below:

Q: Consider the following statements: 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments. 2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments. 3. As per the Constitution of India, it is mandatory for a State to take the Central Government’s consent for raising any loan if the former owes any outstanding liabilities to the latter. Which of the statements given above is/are correct?

Q: With reference to the ‘Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)’, consider the following statements : 1. A property transaction is not treated as a benami transaction if the owner of the property is not aware of the transaction. 2. Properties held benami are liable for confiscation by the Government. 3. The Act provides for three authorities for investigations but does not provide for any appellate mechanism. Which of the statements given above is/are correct ?

Q: Consider the following statements: 1. Tax revenue as a percent of GDP of India has steadily increased in the last decade. 2. Fiscal deficit as a percent of GDP of India has steadily increased in the last decade. Which of the statements given above is/are correct?

Q: 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. Reducing revenue expenditure 2. Introducing new welfare schemes 3. Rationalizing subsidies 4. Reducing import duty Select the correct answer using the code given below.

Q: Which of the following is/are included in the capital budget of the Government of India? 1. Expenditure on acquisition of assets like roads, buildings, machinery, etc. 2. Loans received from foreign governments 3. Loans and advances granted to the States and Union Territories Select the correct answer using the code given below.

Q: With reference to the Fourteenth Finance Commission, which of the following statements is/are correct? 1. It has increased the share of States in the central divisible pool from 32 percent to 42 percent. 2. It has made recommendations concerning sector-specific grants. Select the correct answer using the code given below.

Q: A decrease in tax to GDP ratio of a country indicates which of the following? 1. Slowing economic growth rate 2. Less equitable distribution of national income Select the correct answer using the code given below.

Q: 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 revenue expenditure 2. Introducing new welfare schemes 3. Rationalizing subsidies 4. Expanding industries Select the correct answer using the code given below.

Q: With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure? 1. Defence expenditure 2. Interest payments 3. Salaries and pensions 4. Subsidies Select the correct answer using the code given below.

Q: In India, deficit financing is used for raising resources for

Q: Which one of the following is likely to be the most inflationary in its effect?

Q: Which of the following is/are among the noticeable features of the recommendations of the Thirteenth Finance Commission? 1. A design for the Goods and Services Tax, and a compensation package linked to adherence to the proposed design 2. A design for the creation of lakhs of jobs in the next ten years in consonance with India’s demographic dividend 3. Devolution of a specified share of central taxes to local bodies as grants Select the correct answer using the codes given below:

Q: Which one of the following statements appropriately describes the “fiscal stimulus”?

Q: What is the difference between "vote-on-account" and "interim budget"? 1. The provision of a "vote-on-account" is used by a regular Government, while an "interim budget" is a provision used by a caretaker Government. 2. A "vote-on-account" only deals with the expenditure in Government's budget, while an "interim budget" includes both expenditure and receipts. Which of the statements given above is/are correct?

Q: Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)? 1. The Government intends to use the revenue earned from the disinvestment mainly to pay back the external debt. 2. The Government no longer intends to retain the management control of the CPSEs. Which of the statements given above is/are correct?

Q: Which one of the following was NOT stipulated in the Fiscal Responsibility and Budget Management Act, 2003?

Q: In the context of governance, consider the following : 1. Encouraging Foreign Direct Investment inflows 2. Privatization of higher educational Institutions 3. Down-sizing of bureaucracy 4. Selling/off-loading the shares of Public Sector Undertakings Which of the above can be used as measures to control the fiscal deficit in India ?

Q: Which one of the following is responsible for the preparation and presentation of Union Budget to the Parliament?

Q: Consider the following actions by the Government: 1. Cutting the tax rates 2. Increasing the government spending 3. Abolishing the subsidies In the context of economic recession, which of the above actions can be considered a part of the "fiscal stimulus" package?

Q: With reference to the National Investment Fund to which the disinvestment proceeds are routed, consider the following statements : 1. The assets in the National Investment Fund are managed by the Union Ministry of Finance. 2. The National Investment Fund is to be maintained within the Consolidated Fund of India. 3. Certain Asset Management Companies are appointed as the fund managers. 4. A certain proportion of annual income is used for financing select social sectors. Which of the statements given above is/are correct ?

Q: Which one of the following statements is correct? Fiscal Responsibility and Budget Management Act (FRBMA) concerns

Q: With reference to Indian Public Finance, consider the following statements: 1. Disbursements from Public Accounts of India are subject to the Vote of Parliament. 2. The Indian Constitution provides for the establishment of a Consolidated Fund, a Public Account and a Contingency Fund for each State. 3. Appropriations and disbursements under the Railway Budget are subject to the same form of Parliamentary control as other appropriations and disbursements. Which of these statements given above are correct?

Q: The government holding in BPCL is

Q: With reference to the Indian Public Finance consider the following statements: 1. External liabilities reported in Union Budget are based on historical exchange rates. 2. The continued high borrowing has kept the real interest rates high in the economy. 3. The upward trend in the ratio of Fiscal Deficit to GDP in recent years has an adverse effect to private investments. 4. Interest payments is the single largest component of the non-plan revenue expenditure of the Union Government. Which of these statements are correct?

Q: Consider the following: I. Market borrowing II. Treasury bills III. Special securities issued to RBI Which of these is/are component(s) of internal debt?

Q: Match List I with List II and select the correct answer using the codes given below the Lists: List I (Term) I. Fiscal deficit II. Budget deficit III. Revenue deficit IV. Primary deficit List II (Explanation) A) Excess of Total Expenditure over Total Receipts B) Excess of Revenue Expenditure over Revenue Receipts C) Excess of Total Expenditure over Total Receipts less borrowings D) Excess of Total Expenditure over Total Receipts less borrowings and Interest Payments

Q: The Union Budget, 2000 awarded a Tax Holiday for the North-eastern Region to promote industrialisation for

Q: Assertion (A): Fiscal deficit is greater than budgetary deficit. Reason (R): Fiscal deficit is the borrowings from the Reserve Bank of India plus other liabilities of the Government to meet its expenditure.

Q: Economic Survey in India is published officially, every year by the

Q: Which of the following come under Non-plan expenditure? I. Subsidies II. Interest payments III. Defence expenditure IV. Maintenance expenditure for the infrastructure created in the previous plans Choose the correct answer using the codes given below: Codes:

Q: A redistribution of income in a country can be best brought about through

Q: The following Table shows the percentage distribution of revenue expenditure of Government of India in 1989-90 and 1994-95: (Heads: Defence, Interest Payments, Subsidies, Grants to States/UTs Other) Based on this table, it can be said that the Indian economy is in poor shape because the Central Government continues to be under pressure to

Q: Which of the following are among the non-plan expenditures of the Government of India? I. Defence expenditure II. Subsidies III. All expenditures linked with the previous plan periods IV. Interest payment Choose the correct answer from the codes given below: