π Chapter 07 Β· Previous Year Questions
Union Budget & Fiscal Policy β Previous Year Questions
10 actual questions from UPSC, APPSC, and TGPSC previous year papers on Union Budget & Fiscal Policy.
π‘ Tip: Previous year questions reveal the exact pattern. Study these carefully.
π 10 Previous Year Questions
Consider the following statements about the Union Budget:
1. The Union Budget is presented under Article 112 of the Constitution.
2. The Rajya Sabha can vote on the Union Budget.
3. The Economic Survey is presented before the Union Budget.
Which of the statements given above is/are correct?
1. The Union Budget is presented under Article 112 of the Constitution.
2. The Rajya Sabha can vote on the Union Budget.
3. The Economic Survey is presented before the Union Budget.
Which of the statements given above is/are correct?
A) 1 and 2 only
B) 1 and 3 only
C) 2 and 3 only
D) 1, 2 and 3
β
Answer: B) 1 and 3 onlyStatement 1 is correct β Article 112 mandates the Annual Financial Statement (Union Budget). Statement 2 is incorrect β Rajya Sabha CANNOT vote on the budget; it can only discuss. Statement 3 is correct β Economic Survey is presented a day before the budget.
Which of the following is the correct formula for Revenue Deficit?
A) Revenue Expenditure β Revenue Receipts
B) Total Expenditure β Total Receipts
C) Fiscal Deficit β Interest Payments
D) Capital Expenditure β Capital Receipts
β
Answer: A) Revenue Expenditure β Revenue ReceiptsRevenue Deficit = Revenue Expenditure β Revenue Receipts. It occurs when the government’s day-to-day expenses exceed its regular income. Revenue deficit means the government is borrowing to meet routine expenses β which is considered fiscally irresponsible.
The 15th Finance Commission recommended what percentage of the divisible pool of taxes to states?
A) 32%
B) 42%
C) 41%
D) 45%
β
Answer: C) 41%The 15th Finance Commission (2021-26) recommended 41% of the divisible pool of central taxes to states. This was reduced from 42% (14th Finance Commission) to accommodate the newly created Union Territories of Jammu & Kashmir and Ladakh. Chairman: N.K. Singh.
The Contingency Fund of India is established under which article?
A) Article 266
B) Article 267
C) Article 280
D) Article 112
β
Answer: B) Article 267The Contingency Fund of India is established under Article 267. It is an emergency fund held by the President with a corpus of βΉ500 crore. The President can withdraw from it without Parliament’s approval for unforeseen expenditure, but it must be replenished by Parliament later.
Which of the following is a Revenue Expenditure?
A) Construction of a highway
B) Purchase of defence equipment
C) Payment of salaries to government employees
D) Loans given to state governments
β
Answer: C) Payment of salaries to government employeesSalaries are revenue expenditure β they don’t create assets. Construction of highways and purchase of defence equipment are capital expenditure β they create assets. Loans to state governments are capital expenditure β they create financial assets (loans receivable).
The FRBM Act’s target for fiscal deficit is:
A) 2% of GDP
B) 3% of GDP
C) 4% of GDP
D) 5% of GDP
β
Answer: B) 3% of GDPThe FRBM Act (2003) targets fiscal deficit at 3% of GDP. The NK Singh Committee (2016) recommended revising this to 2.5% of GDP. India’s actual fiscal deficit has often exceeded this target β it reached ~9.2% during COVID-19 (2020-21).
Which of the following is NOT a Revenue Receipt of the Government of India?
A) Income tax
B) GST
C) Borrowings from market
D) Dividends from PSUs
β
Answer: C) Borrowings from marketBorrowings from market are capital receipts β they create liabilities. Revenue receipts include income tax, GST, customs duty (tax revenue) and dividends from PSUs, fees, fines (non-tax revenue). Revenue receipts do NOT create liabilities or reduce assets.
The Economic Survey of India is presented by:
A) RBI Governor
B) NITI Aayog Vice-Chairperson
C) Chief Economic Adviser (CEA) under Finance Ministry
D) Finance Minister
β
Answer: C) Chief Economic Adviser (CEA) under Finance MinistryThe Economic Survey is prepared by the Chief Economic Adviser (CEA) under the Ministry of Finance. It is presented a day before the Union Budget. It provides a comprehensive overview of the Indian economy β growth, inflation, fiscal situation, and policy recommendations.
If Primary Deficit is zero, it means:
A) There is no fiscal deficit
B) There is no revenue deficit
C) The government is borrowing only to pay interest on past debt
D) The government has a budget surplus
β
Answer: C) The government is borrowing only to pay interest on past debtPrimary Deficit = Fiscal Deficit β Interest Payments. If Primary Deficit = 0, then Fiscal Deficit = Interest Payments. This means the government is borrowing only to pay interest on its past debt β not adding to its debt burden. A zero primary deficit is a sign of fiscal improvement.
The NK Singh Committee (2016) was set up to review:
A) GST implementation
B) Banking sector reforms
C) FRBM (Fiscal Responsibility and Budget Management) Act
D) Agricultural credit
β
Answer: C) FRBM ActThe NK Singh Committee (Fiscal Responsibility Review Committee) was set up in 2016 to review the FRBM Act. It recommended revising the fiscal deficit target to 2.5% of GDP, introducing a Fiscal Council, and allowing an escape clause of 0.5% deviation in exceptional circumstances.