Fiscal Policy & Revenue (Part – II)

Total Questions: 50

31. Fiscal deficit stood at what percentage of GDP in the year 1990-91? [M.P.P.C.S. (Pre) 1992*]

(a) 8.4
(b) 6.5
(c) 9.1
(d) 11.0

Correct Answer: (a) 8.4
Note:

Among the given financial years, fiscal deficit GDP/ ratio had been maximum in the year 2011-12(5.9%). Fiscal deficit was at 9.2 percent of the GDP in 2020-21 which is the highest level of fiscal deficit for the Centre since 8.4 percent reported in financial year 1990-91.

32. In the Union Budget of 1996-97, the largest level of fiscal deficit is: [U.P.P.C.S. (Pre) 1996*]

(a) 5.0 percent of GDP
(b) 5.9 percent GDP
(c) 6.8 percent of GDP
(d) 7.5 percent of GDP

Correct Answer: (a) 5.0 percent of GDP
Note:

The fiscal deficit in the Union Budget 1996-97 was targeted at 5.0% of Gross Domestic Product (GDP). In the Interim Union Budget 2024-25, fiscal deficit is targeted at 5.1 per- cent, whereas in the revised estimates of 2023-24 fiscal deficit is at 5.8 percent of the GDP.

33. As per the Budget 2001-2002 the current fiscal deficit of India is: [U.P.P.C.S.(Pre) 2001, 2005, U.P.U.D.A/L.D.A. (Pre) 2002*]

(a) 4.7 per cent
(b) 5.1 per cent
(c) 5.5 per cent
(d) 6.1 percent

Correct Answer: (a) 4.7 per cent
Note:

As per the question year, option (a) was the correct answer. According to Interim Union Budget 2024-25, fiscal deficit of India is estimated at Rs. 1685494 crore, which is 5.1% of GDP.

34. In the Budget 2009-10 the fiscal deficit is placed at: [U.P.P.S.C. (GIC) 2010]

(a) 3.4%
(b) 5.6%
(c) 6.8%
(d) 7.2%

Correct Answer: (c) 6.8%
Note:

The fiscal deficit was targeted at 6.8% of GDP in the Union Budget 2009-10. In the Interim Union Budget 2024-25, the fiscal deficit is targeted at 5.1% of GDP.

35. In the Union Budget 2010-11, fiscal deficit is estimated at: [U.P.P.C.S. (Spl.) (Mains) 2008*]

(a) 5.5% of GDP
(b) 3.5% of GDP
(c) 6.0% of GDP
(d) 4.5% of GDP

Correct Answer: (a) 5.5% of GDP
Note:

In the Union Budget 2010-11 fiscal deficit was estimated In theof GDP (As per actual figures it wascal de 2010-11 In the financial year 2022-23 (Actuals) fiscal deficit stood 6.4% of GDP, while in the year 2023-24 (RE.) it is estimated 5.8%. In the Interim Budget estimates 2024-25 fiscal deficit estimated at 5.1% of the GDP.

36. What is the fiscal deficit target of India for the financial year 2016-17? [B.P.S.C. (Pre) 2016]

(a) 3.9% of GDP
(b) 3.5% of GDP
(c) 4.9% of GDP
(d) 4.5% of GDP
(e) None of the above/More than one of the above

Correct Answer: (b) 3.5% of GDP
Note:

In Union Budget 2016-17, the fiscal deficit target for the financial year 2016-17 was at 3.5% of GDP. The government's fiscal deficit target in the Interim Union Budget 2024-25 is estimated at Rs. 1685494 crore or 5.1% of the GDP

37. What was the most important reason for the popularity of the National Budget of February 1997? [M.P.P.C.S. (Pre) 1997]

(a) Control on inflation
(b) Reduction in budget deficit
(c) Increase in pay-scale etc. of Central employees
(d) Reduction in almost every tax

Correct Answer: (d) Reduction in almost every tax
Note:

The rates of almost every tax had been reduced in the Union Budget 1997-98 presented by the then Finance Minister, P. Chidambaram. The Finance Minister announced lower Income Tax rates of 10, 20 and 30% as against the erstwhile 15,30 and 40%. The 1997-98 Budget abolished the surcharge on the Corporate Tax and reduced the Corporate Tax rate from 48 percent to 35 percent for domestic companies. That Budget also reduced the peak rate of Customs duty from 50 percent to 40 percent.

38. The present fiscal deficit of States has touched a record of: [U.P.P.C.S. (Pre) 2000*]

(a) Rs. 40,000 crore
(b) Rs. 50,000 crore
(c) Rs. 75,000 crore
(d) Rs. 1,00,000 crore

Correct Answer: (d) Rs. 1,00,000 crore
Note:

As per the question period, option (d) was the correct answer. The combined gross fiscal deficit of the State Governments was budgeted at Rs. 9.48 lakh crore in 2023-24 (B.B.), which was at 3.1 percent of the country's GDP. The combined gross fiscal deficit of the States, which increased to 4,1 percent of GDP (Rs. 8.05 lakh crore) in the pandemic-affected year (2020- 21), was brought down to 2.8 percent of GDP (Rs. 6.55 lakh crore) in 2021-22 (Actuals) which was sustained at 2.8 percent of GDP (7.53 lakh crore) in 2022-23 (Provisional Accounts).

39. Consider the following statements with reference to Uttar Pradesh Budget, 2023-24: [U.P. R.O/A.R.O. (Pre) 2023]

1. The size of the Budget is Rs. 7,60,000 crore.

2. The Fiscal Deficit is estimated to be at Rs. 84,883.16 crore.

Select the correct answer using the code given below:

Code:

(a) Neither 1 nor 2
(b) Only 2
(c) Only 1
(d) Both 1 and 2

Correct Answer: (b) Only 2
Note:

The size of the Uttar Pradesh Budget 2023-24 was Rs. 690242.43 crore while the Fiscal Deficit in this budget was estimated at Rs. 84883.16 crore. Hence, statement 1 is incorrect while statement 2 is correct.

The size of the Uttar Pradesh Budget 2024-25 is Rs. 736437.71 crore and the Fiscal Deficit in this budget is estimated to be at Rs. 86530.51 crore.

40. With reference to the Indian Public Finance, consider the following statements: [I.A.S (Pre) 2002]

1. External liabilities reported in the 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 non-plan revenue expenditure of the Union Government.

Which of these statements are correct?

(a) 1, 2 and 3
(b) 1 and 4
(c) 2, 3 and 4
(d) 1, 2, 3 and 4

Correct Answer: (c) 2, 3 and 4
Note:

External liabilities reported in the Union Budget are not based on historical exchange rates. These are based on current or floating exchange rate. Hence, statement 1 is incorrect while statement 2, 3 and 4 are correct.

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