Vidyamandir Classes: Innovating For Your Success

Chapter-6_Government budget and the Economy

 A government budget is prepared for a fiscal year running from 1st April on 31st March.
 G.S.T stand for goods and services tax.
 Goods and services tax affects national income.
 Direct tax is called direct because it is collected directly from the income earners.
 Borrowing in government budget is fiscal budget.
 Interest payments are subtract from fiscal deficit to arrive at primary deficit.
 While financing a deficit, under deficit financing measure government can print more currency.
 Primary deficit in a government budget is fiscal-deficit-Interest payments.
 Fiscal deficit equals to primary deficit plus payments.
 The non-tax revenue in Dividends.
 Subsidies is a revenue expenditure.
 A large fiscal deficit implies large amount of borrowings.
 Primary deficits is borrowing requirements of governments far making other than interest payments.
 Redistribution of income and wealth economic stability these are the objectives of government budget.
 Excise duty is indirect tax.
 Gifts and grants is a non-tax receipts of the government.
 An annual statement of the estimated receipts and expenditure of the governments over the fiscal year is
known as government budget.
 Revenue budget, capital budget is the component of budget.
 The government plants to impose high taxes on tobacco products. The main objective of government is
reallocation of resources.
 Recovery of loan is a non-debt creating capital receipt.
 Direct tax incidence can’t be shifted.
 A tax whose burden can be shifted to others is called indirect tax.
 If government expenditure on health infrastructure rises, national income is likely to rise.
 With the introduction of GST, income tax is not be affected.
 Export Duty is the tax revenue of the government.
 Loans to state governments by central government is capital expenditure for the central government.
 Expenditure on maintenance of government (budget) office building is revenue expenditure.
 Payment of interest is the revenue expenditure of the government
 Subsidies is revenue expenditure.

VMC 1 Government budget and the Economy

 Vidyamandir Classes: Innovating For Your Success

 Public expenditure tax public debt is included in fiscal policy.

 To central inflation in the economy government should do increase taxes, decrease expenditure.
 When government spends more than it collects by way of revenue it incurs budget deficit.
 Fiscal deficit is always in factionary.
 Profit of PSU’s is a non-tax revenue receipt.
 Fiscal deficit is equal to borrowings

Corporate tax is

Direct tax

Level on firm’s profit

Collected by central government.

VMC 2 Government budget and the Economy