Prefit2023batchi Test42 Explanation

PRELIMS FITNESS – 2023
TEST 42 – ECONOMICS
EXPLANATION
1. With reference to various statements of the FRBM Act, Which among the following is the objective of The
Medium-term Fiscal Policy Statement ?
1. It set forth a three-year rolling target for prescribed fiscal indicators
2. It evaluates how the current policies of the Central Government conform to the fiscal management
principles
Select the correct answer using the code given below
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION :
The FRBM Act aims to introduce transparency in India's fiscal management systems. The Act's long-
term objective is for India to achieve fiscal stability and to give the Reserve Bank of India (RBI) flexibility
to deal with inflation in India. The FRBM Act introduced a more equitable distribution of India's debt
over the years.
The FRBM Act – by limiting the total fiscal deficit (to 3% of nominal GDP) and asking for the revenue
deficit to be eliminated altogether is helping the governments to switch their expenditure from revenue
to capital.
Some of the important features of the FRBM Act 2003 are
➢ The central Government shall (a) take appropriate measures to limit the fiscal deficit up to 3%
percent of GDP by March 31, 2021. (b) endeavor to ensure that- The general government debt
(equal to central govt. debt plus state govt. debt) does not exceed 60 percent of GDP by 2024-
25. The central government debt does not exceed 40 percent of GDP by 2024-25.
➢ Any deviation from the fiscal deficit target under the above clause (2) shall not exceed one-half
percent (0.5%) of the GDP in a year.
➢ In case of an increase in real output growth of a quarter by at least three percentage points
above its average of the previous four quarters, the Central Government shall reduce the fiscal
deficit by at least one-quarter percent of the GDP in a year.
➢ Like the Centre, Every state has also fixed a Fiscal deficit limit of 3% in their laws.
➢ The Medium-term Expenditure Framework Statement shall set forth a three-year rolling target
for prescribed expenditure indicators, specifying underlying assumptions and risks involved.
So, Statement 1 is correct.
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Measures for fiscal transparency:
(a) The Central Government shall take suitable measures to ensure greater transparency in its fiscal
operations in the public interest and minimize, as far as practicable, secrecy in the Preparation of the
annual budget
(b) The central Government, at the time of presentation of the budget, makes such disclosures and,
in such form as may be prescribed
➢ The Finance Minister shall review, on a half-yearly basis, the trends in receipts and
expenditure in relation to the budget and place before both Houses of Parliament the outcome of such
reviews.
➢ Except as provided under this Act, no deviation in meeting the obligations cast on the Central
Government under this Act shall be permitted without the approval of Parliament
➢ Evaluation of how the Central Government's current policies conform with the fiscal
management principles is part of The Fiscal Policy Strategy Statement, and the objectives set
out in the Medium-term Fiscal Policy Statement. So, Statement 2 is not correct.
2. Which among the following is/are the new criteria included under the 15th Finance commission
recommendations
1. Forest and Ecology
2. Population based on the 2011 census
3. Demographic performance
4. Tax effort
(a) 1, 2, and 3 only
(b) 2 and 3 only
(c) 1,3 and 4 only
(d) All the above
EXPLANATION:
The Finance Commission is a Constitutionally mandated body at the Centre of fiscal federalism. Set
up under Article 280 of the Constitution. Its core responsibility is to evaluate the state finances of the
Union and State Governments, recommend the sharing of taxes between them, and lay down the
principles determining the distribution of these taxes among States.
The Finance Commission uses certain criteria when deciding the devolution to states. For example,
the 14th and 15th Finance Commissions have used the income distance criterion. Under this criterion,
states with lower per capita income would be given a higher share to maintain equity among states.
Another example is the Demographic Performance criterion which the 15th Finance Commission
introduced. The Demographic Performance criterion is to reward efforts made by states in controlling
their population.
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Criteria for devolution (2020-21)
Criteria 14th FC 2015-20 15th FC 2020-21
Income Distance 50.0 45.0
Population 1971 17.5 -
Population 2011 10.0 15.0
Area 15.0 15.0
Forest Cover 7.5 -
Forest and Ecology - 10.0
Demographic Performance - 12.5
Tax Effort - 2.5
Total 100 100
The 15th Finance Commission used the following criteria while determining the share of states: (i)
45% for the income distance, (ii) 15% for the population in 2011, (iii) 15% for the area, (iv) 10% for
forest and ecology, (v) 12.5% for demographic performance, and (vi) 2.5% for tax effort. For 2020-21,
the Commission has recommended a total devolution of Rs 8,55,176 crore to the states, which is 41%
of the divisible pool of taxes. This is 1% lower than the percentage recommended by the 14th Finance
Commission. So, Option (c) is correct.
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3. With reference to the 15th finance commission, which of the following is the largest grant component for
the period of FY 2021-2026
(a) Local government grants
(b) Disaster management grants
(c) Revenue deficit grants
(d) Sectoral grants for health
EXPLANATION:
The Finance Commission is a constitutional body formed by the President of India to give suggestions
on center-state financial relations. The 15th Finance Commission is required to submit two reports.
The first report will consist of recommendations for the financial year 2020-21. The final report with
recommendations for the 2021-26 period will be submitted by October 30, 2020.
➢ The total size of the grant to local governments should be Rs. 4,36,361 crore for 2021-26. Of
these total grants, Rs. 8,000 crore is performance-based grants for incubating new cities, and
Rs. 450 crore is for shared municipal services. A sum of Rs. 2,36,805 crore is earmarked for
rural local bodies, Rs.1,21,055 crore for urban local bodies and Rs. 70,051 crores for health
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grants through local governments. Urban local bodies have been categorized into two groups
based on population, and different norms have been used for the flow of grants to each based
on their specific needs and aspirations. So, option (a) is correct.
S.no. Grant Components 2021-26
1 Revenue Deficit grants 294514
2 Local governments grants 436361
3 Disaster management grants 122601
4 Sector-specific grants 129987
i Sectoral grants for Health 31755
ii School Education 4800
iii Higher Education 6143
iv Implementation of agricultural reforms 45000
v Maintenance of PMGSY roads 27539
vi Judiciary 10425
vii Statistics 1175
viii Aspirational districts and blocks 3150
5 State-specific 49599
Total 1033062
4. Which among the following characteristics is/are associated with Recession

1. Increase in aggregate demand
2. Reduction in international trade
3. Increase in the unemployment rate
(a) 1 only
(b) 2 and 3 only
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(c) 1 and 3 only
(d) 3 only
EXPLANATION:
A recession is when the economy stops growing and starts shrinking. Some say that happens when
the value of goods and services produced in a country, known as the gross domestic product, declines
for two consecutive quarters or half a year.
According to the bureau, a recession is "a significant decline in economic activity" that is widespread
and lasts several months. Typically, that means not only shrinking GDP but also declining incomes,
employment, industrial production and retail sales.
There are a variety of reasons recessions take place. Some are associated with sharp changes in the
prices of the inputs used in producing goods and services. For example,
➢ a sharp increase in oil prices can be a harbinger of a coming recession. As energy becomes
expensive, it pushes up the overall price level, leading to a decline in aggregate demand.
➢ A recession can also be triggered by a country's decision to reduce inflation by employing
contractionary monetary or fiscal policies. When used excessively, such policies can lead to a
decline in demand for goods and services, eventually resulting in a recession.
So, Statement 1 is not correct.
➢ The unemployment rate almost always increases, and inflation falls slightly because the overall
demand for goods and services is curtailed. Along with the erosion of house and equity values,
recessions tend to be associated with turmoil in financial markets.
➢ Because of the Recession, drops in international trade as exports and, especially, imports fall
sharply during periods of slowdown. So, Statements 2 and 3 are correct.
5. With reference to Business Cycle, consider the following statements

1. Both Recession and depression are part of the Contraction phase of the business cycle
2. Recession is more severe than depression, in which the decline in GDP exceeds 10 percent
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
Business cycles are characterized by the expansion of economic variables in one period and
contraction in the subsequent period. In the upward-sloping curve (expansion phase), there is an
acceleration in the growth rate. The downward-sloping segment of the curve indicates the 'contraction
phase.'
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According to some researchers, there are four phases of a business cycle, viz., expansion, Recession,
depression and recovery. The expansion phase comprises both recovery and expansion. Similarly, the
contraction phase consists of both Recession and depression.
➢ In the recession phase, all the economic variables, such as production, prices, saving and
investment, start decreasing. During the recession phase, producers usually avoid new
investments, which leads to a reduction in the demand for factors of production and a
consequent decline in input prices and unemployment. Firms reduce levels of production and
the number of people on their payrolls. A chain reaction starts, lower income, lower demand,
lower output, lower employment, and so on.
➢ During a depression, there is not just a decline in the growth rate but a decline in the absolute
level of GDP. As sales decline, business houses find it difficult to repay their debts as business
sentiments are low enough to carry out new investments, and demand for credit declines.
Banks also become cautious in their lending as the chances of default on repayment increase.
Especially the Great Depression of the 1930s. There is no formal definition of depression, but most
analysts consider depression to be an extremely severe recession in which the decline in GDP exceeds
10 percent. There have been only a handful of depression episodes in advanced economies since 1960.
The most recent was in the early 1990s in Finland, which registered a decline in GDP of about 14
percent. That depression coincided with the breakup of the Soviet Union, a large trading partner of
Finland. During the Great Depression, the US economy contracted by about 30 percent over four
years. Although the current Recession is obviously severe, its output cost so far has been much
smaller than that of the Great Depression. So, Statement 2 is not correct.
6. Which among the following can be considered as the measure under countercyclical fiscal policy
1. Increase in public expenditure during the boom phase
2. Decrease in public expenditure during the boom phase
3. Increase in the tax revenue during the recession phase
4. Decrease in tax revenue during the recession phase
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(a) 1 and 3 only
(b) 1 and 4 only
(c) 2 and 3 only
(d) 2 and 4 only
EXPLANATION:
The cyclicality of fiscal policy simply refers to a change in the direction of government expenditure and
taxes based on economic conditions. These pertain to decisions by policymakers based on the
fluctuations in economic growth. There are two types of cyclical fiscal policies - countercyclical and
pro-cyclical.
Countercyclical fiscal policy refers to the Government's steps that go against the direction of the
economic or business cycle.
➢ Thus, in a recession or slowdown, the Government increases expenditures and reduces taxes
to create a demand that can drive an economic boom. On the other hand, during a boom in
the economy, countercyclical fiscal policy aims at raising taxes and cutting public expenditure
to control inflation and debt. So, Statements 2 and 4 are correct.
➢ One, an expansion in government expenditure cushions the contraction in output by offsetting
the decline in consumption and investment.
➢ Two, higher government spending builds confidence in tough times. Through this policy,
governments can show their commitment to sound fiscal management.
In a pro-cyclical fiscal policy, the Government reinforces the business cycle by being expansionary
during good times and contractionary during recessions. Pursuing a pro-cyclical fiscal policy is
generally regarded as dangerous. It could raise macroeconomic volatility, depress investment in real
and human capital, hamper growth and harm the poor, say economists.
7. With reference to Taxation in India, which among the following is/are the possible reasons for the low
income tax base?
1. Exemption of agricultural income from income tax
2. The worker-population ratio is less than 50%
3. More than 60% of Indian households' annual income is less than 5lakhs
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
EXPLANATION:
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The number of taxpayers is low in the country. According to World Bank, of the total population of
140.76 crores in 2021, only 95 crore people were in the working age group of 18 to 64 years. Now, not
all those of working age are employed. Many women, for instance, are homemakers or caregivers and
may not be in the working cohort. The worker population ratio in India is 44.5 percent, which means
that only 42 crore people could be employed in some way or the other in India.
➢ Further, a dominant portion of India's agriculture and agri-income workforce is exempt under
income tax. This results in 45.6 percent of agri-workers not filing tax returns. So, only 23
crores of the workers in the non-agri segment are liable to pay tax.
➢ The worker population ratio in India is 44.5 percent, which means that only 42 crore people
could be employed in some way or other in India
➢ Besides these, the tax incidence arises if the income is above a certain threshold. If we account
for people earning under ₹5 lakh per annum, that will likely further whittle down the taxpayer
base. According to Statista, 67 percent of Indian households had an annual income under ₹6
lahks in 2021. This reduces potential income taxpayers to 7.6 crores.
So, option (d) is correct.
8. The higher tax buoyancy in an economy indicates

(a) Increase in the tax rate of the Government
(b) Increase in tax evasion by many people
(c) Increase in the efficiency of the taxation system
(d) Increase in the direct tax collection over indirect tax
EXPLANATION:
Tax buoyancy refers to increased tax collections in proportion to a rise in national income. A higher
buoyancy reflects the increased efficiency of the tax system.
Tax buoyancy is an indicator to measure the efficiency and responsiveness of revenue mobilization in
response to growth in the GDP or National Income. It is measured as a ratio of growth in Tax Revenue
to the growth in nominal GDP (i.e., the ratio of a percentage change in tax revenue to a percentage
change in nominal GDP). Tax buoyancy greater than one is good for the economy.
After the GST implementation on July 1, 2017, Improved tax collection efficiency was one of the main
arguments in favour of GST. The evidence suggests that GST shows a higher buoyancy than the pre-
GST system. As per the Economic Survey, this augurs well for future resource mobilization in the
economy. So, Option (c) is correct.
9. With reference to the Taxation system, consider the following statements

1. In progressive taxation, the tax burden increases with increasing income
2. In regressive taxation, the tax burden remains the same for all income groups
3. In India, income tax and corporate tax are progressive
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(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
EXPLANATION:
Progressive tax—A tax that takes a larger percentage of income from high-income groups
Than from low-income groups. In other words, the Tax percentage increases with an increase in
income. Here, an individual with a high income pays a higher proportion of their income as tax. The
tax burden of the taxpayer also goes up when the tax is progressive.
An example of progressive taxation is a 10% tax rate for income of Rs 2 lakh, 20% for Rs 5 lakh and
30% for Rs 10 lakh. Here, the tax liability or the absolute amount, as well as the proportion of income
to be paid as tax, increases with the income of the taxpayer. So, Statement 1 is correct.
Under proportional tax—A tax that takes the same percentage of income from all income groups.
Whereas in regressive tax—A tax that takes a larger percentage of income from low-income groups
than high-income groups. In other words, the Tax percentage decreases with an increase in income.
In the case of a regressive tax, the tax rate decreases with an increase in income. Here, the taxpayer's
tax liability decreases with an increase in his income. Or in other words, the proportion of his income
to be paid as tax decreases with an increase in income.
For example, suppose there is a 30% tax for Rs 2 lakh, 20% for Rs 5 lakh and 10% for Rs 10 lakh.
Here, the tax liability or the amount of the income to be paid as tax decreases with an increase in
income. So, Statement 2 is not correct.
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The direct taxes (personal income tax) and firms (corporation tax), and indirect taxes like excise taxes
(duties levied on goods produced within the country), customs duties (taxes imposed on goods
imported into and exported out of India) and service tax. Other direct taxes like wealth tax, gift tax
and estate duty (now abolished) have never brought in large
amount of revenue has thus been referred to as 'paper taxes'.
India follows the progressive tax slab rate system for individual taxpayers, where the tax rate is
determined based on varied factors like Age groups; Different levels of income of the individual where
high income-earners are subject to higher tax rates; Further, a surcharge is applicable on tax
depending on the income level; Additionally, the Health and Education Cess @ 4% is levied on the tax
plus surcharge.
The redistribution objective is sought to be achieved through progressive income taxation, in which
the higher the income, the higher the tax rate. Corporate taxes are taxed proportionally, where the tax
rate is a particular proportion of profits. So, statement 3 is not correct.
10. With reference to Union Budget 2023-24, Arrange the following taxes in descending order based on their
contribution to the revenue of the Union government
1. Corporate tax
2. Goods and Service tax
3. Custom duty
4. Excise duty
(a) 1-2-3-4
(b) 2-1-4-3
(c) 1-3-4-3
(d) 2-1-3-4
EXPLANATION:
The Government's primary income source is tax and non-tax revenues. Taxes are collected in the form
of direct and indirect ways. Direct taxes include income tax, real property tax, personal property tax,
or taxes on assets, while some of the indirect tax modes include GST, customs duty and tax deducted
at source (TDS).
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On the other hand, non-tax revenue is the recurring income earned by the Government from sources
other than taxes. The top receipts under this are interest, dividends, and public sector companies'
profits. The major sources of revenue for the Indian Government are the GST and corporate tax, excise
duty and customs duty. So, option (b) is correct.
11. Which among the following is not characteristic of tax

(a) Tax is a compulsory payment made by the citizen to the Government.
(b) A tax is not levied as a fine or penalty for breaking the law.
(c) Tax establishes quid pro quo between a taxpayer and public authorities.
(d) Every tax involves some sacrifice on the part of the taxpayer.
EXPLANATION:
A Tax is a compulsory payment made by a person or a firm to a government without reference to any
benefit the payer may derive from the Government.
The main objective of taxation is to fund government expenditures.
Other objectives: Resource mobilization for economic development, Income redistribution to reduce
inequalities in the distribution of income and wealth, Price stability and Employment generation.
Characteristics of Tax
➢ A tax is a compulsory payment made to the Government. People on whom a tax is imposed
must pay the tax. Refusal to pay the tax is a punishable offense. So, Statement 1 is correct.
➢ There is no quid pro quo between a taxpayer and public authorities. This means taxpayers
cannot claim any specific benefit against a tax payment. So, Statement 2 is not correct.
➢ Every tax involves some sacrifice on the part of the taxpayer. So, Statement 3 is correct.
➢ A tax is not levied as a fine or penalty for breaking the law. So, Statement 4 is correct.
12. With reference to Gender Budgeting, which among the following statements is incorrect
(a) The union government publishes a gender budget statement every year along with the Union
Budget.
(b) Gender Budget as the percentage of GDP has been steadily increasing for the past 10 years
(c) All union ministries are mandated to set up Gender Budgeting Cells under them
(d) Mahatma Gandhi National Rural Employment Guarantee Scheme is one of the schemes included
under the gender budget
EXPLANATION:
The Ministry of Women and Child Development (MoWCD) defines gender budgeting as a tool to achieve
gender mainstreaming to ensure that development benefits reach women as much as men. The
Government publishes a Gender Budget Statement (GBS) annually along with the Union Budget. So,
Statement 1 is correct.
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As such, it is not a separate accounting exercise but "an ongoing process of keeping a gender
perspective in policy/program formulation, its implementation and review" Gender Budget as the GDP
percentage has not steadily increased for the past 10 years. So, Statement 2 is not correct.
The Ministry of Finance, as the agency with primary responsibility for the budget, has also recognized
the potential of Gender Budgeting. The Ministry of Finance mandated all ministries to establish
Gender Budgeting Cells by January 2005 and asked 18 ministries and departments to submit a report
highlighting budgetary allocations for women. The first Gender Budget Statement (GBS) appeared in
the Union Budget 2005-06 and included 10 demands for grants. So, Statement 3 is correct.
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Around 90 percent of gender budgeting is concentrated in five ministries. Regarding livelihood,
MGNREGA is the biggest scheme in gender budgeting that focuses on livelihood. So, Statement 4 is
correct.
13. Which among the following is/are the major recommendations of the FRBM Review Committee
1. Using government debt as the primary target for fiscal policy.
2. Setting up of autonomous Fiscal Council to prepare the government budget
3. Elimination of revenue deficit target in the next five years of adoption of the Act
Select the correct statements using the code given below
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
EXPLANATION:
The FRBM review committee, also known as NK Singh Committee, was formed in 2016
under the Chairmanship of NK Singh, former revenue and expenditure secretary. It
prepared a draft Debt Management and Fiscal Responsibility Bill 2017 to replace the
physical responsibility and budget management Act 2003.
Key recommendations of the Committee are listed below:
➢ Debt to GDP ratio: The Committee recommended using debt as the primary target
for fiscal policy. A Debt to GDP ratio of 60% should be targeted with a 40% limit for
the Center and a 20% limit for the states. The targeted debt-to-GDP ratio should be
achieved by 2023.
Debt indicates the total outstanding liabilities of the Government. In contrast, the fiscal
deficit indicates new borrowings made in the year, and the revenue deficit indicates what
part of the new has been used to cover revenue expenses. So, Statement 1 is correct.
The NK Singh Committee proposed to create an autonomous fiscal Council with a
chairperson and two members to be appointed by the Center. Further, these people should
not be Central or State Government employees at the time of their appointment. The role
of the Council would include the following:
(i) Preparing multi-year fiscal forecasts,
(ii) Recommending changes to the fiscal strategy,
(iii) Improving the quality of fiscal data,
(iv) Advising the Government if conditions exist to deviate from the fiscal target,
Thus, the Preparation of the government budget is not the function of the Fiscal Council.
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To achieve the targeted debt-to-GDP ratio, it proposed yearly targets to progressively reduce
(Not complete elimination) the revenue deficits and fiscal deficits till 2023.
14. Which among the following best describes the nature of Revenue Expenditure
(a) The money spent by the Government on the repayment of loans
(b) The money spent by the Government for schemes and programs of the Government's five-year plan
(c) The money spent by the Government for meeting the expenditure of public sector undertakings
(PSU)
(d) The money spent by the Government to meet its recurring day-to-day expenditure
EXPLANATION:
The Union government defines capital expenditure as
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➢ money spent on the acquisition of fixed and intangible assets,
➢ upgrading an existing asset,
➢ repairing an existing asset, and
➢ loan repayment and
➢ The money spent by the Government for meeting the expenditure of public sector undertakings
(PSU) and for schemes and programs of the Government's five-year plan is typically considered
part of the Government's capital expenditure.
➢ The money spent by the Government on the repayment of loans reduces the Government's
liability, so it comes under capital expenditure. So, Statements 1, 2 and 3 describe capital
expenditure's nature and are incorrect.
Revenue Expenditure is expenditure incurred for purposes other than the creation of physical or
financial assets of the central Government. An expenditure that neither creates assets nor reduces
liability is called Revenue Expenditure.
➢ It relates to those expenses incurred for the normal functioning of the government departments
and various services,
➢ Interest payments on debt incurred by the Government, and
➢ Grants are given to state governments and other parties (even though some of the grants may
be meant to create assets).
➢ The money spent by the Government to meet its recurring day-to-day expenditure.
15. With reference to capital expenditure, consider the following statements

1. The Union government has steadily increased Capital expenditure for the past five years.
2. An increase in capital expenditure can ramp up the virtuous cycle of investment and job creation
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
Capital expenditures are the Government's expenditures that result in the creation of physical or
financial assets or depletion in financial liabilities. This includes money spent on investments in land,
buildings, machinery, or equipment, as well as money invested in stocks.
The Union Budget's fiscal policy statements highlighted that the capex is almost 3 times the capital
expenditure in FY 2019-20. The key infrastructure and strategic Ministries, such as Road Transport
and Highways, Railways, Defence, etc., are leading in driving the capital expenditure in FY 2023-24.
The Union government has steadily increased Capital expenditure for the past five years.
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By increasing capital expenditure, the Government's emphasis is on developing infrastructure. It also
seeks to ensure equity and equality of such investments nationwide. This is in line with the
Government's focus and commitment to the Four I's - Infrastructure, Investment, Innovation and
Inclusion in the next 25 years.
This time, the budget took the initiative by sharply boosting the capital expenditure outlay by 37.4%
in BE 2023–24 to a whopping Rs. 10 lakh crore over Rs. 7.28 lakh crore in RE 2022–23 to accelerate
the virtuous cycle of investment and job creation.
16. Which among the following measures can be taken by the Government to reduce the fiscal deficit ?
1. Increasing subsidies
2. Rationalizing welfare schemes
3. Expanding industries
4. Reducing revenue expenditure
(a) 1 and 2 only
(b) 1 and 4 only
(c) 2 and 3 only
(d) 2 and 4 only
EXPLANATION:
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The difference between total revenue and total expenditure of the government is termed as fiscal
deficit. It is an indication of the total borrowings needed by the government.
➢ Welfare programs make up most of the government spending; therefore, rationalizing or right-
sizing the welfare program and its funding distribution lowers the budget deficit. So, Statement
2 is correct.
➢ Reducing revenue expenditures can aid in lowering a country's budget deficit. This can be
accomplished by eliminating unnecessary services and programs, improving operational efficiency,
and lowering the number of government employees. So, Statement 4 is correct.
The practice of the Government or another institution giving financial aid or incentives to people,
businesses, or industries is called increasing subsidies. Instead of decreasing the budget deficit, it
widens it by raising government spending. So, Statement 1 is not correct.
Expanding industries may also require government spending to support their growth and invest in
infrastructure, such as roads or utilities, to support the expansion of an industry. To promote the
expansion of specific industries, the Government may also offer subsidies or tax breaks, which may
result in a rise in overall government spending. So, Statement 3 is not correct.
17. With reference to fiscal policy, consider the following statements

1. The Government formulates fiscal policy to mobilize the resources for both development and non-
development activities
2. A stable fiscal policy can increase the rate of capital formation both in the public and private sector
Which among the statements given above is/are correct ?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
In India, the Union finance ministry formulates the fiscal policy. The term fiscal policy refers to a
policy under which the Government uses its expenditure and revenue programs to produce desirable
effects and avoid undesirable effects on the national income, production and employment. Taxes,
subsidies, public debt and public expenditure, are fiscal policy instruments.
➢ Through Fiscal policy, the Government generates revenue and reduces wealth inequalities. The
fiscal policy helps mobilize resources for both development and non-development activities.
➢ It gives incentives to the private sector to expand its activities.
➢ Fiscal policy planning gives a larger chunk of funds for regional development to achieve
balanced regional development.
➢ It also aims to reduce the deficit in the balance of payment. So, Statement 1 is correct.
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A prudent fiscal policy stabilizes prices and helps control inflation. It is a crucial part of the economic
framework. In India, it plays a key role in elevating the rate of capital formation, both in the public
and private sectors.
➢ The fiscal policy, either by direct or indirect means, can influence the process of capital
formation by affecting the amount of net disposable income or by changing the marginal
propensity to save.
➢ Reforming the tax system by shifting the major tax burden from direct to indirect taxation
facilitates savings and capital formation.
➢ Fiscal policy can have a significant impact on capital formation in several ways. For example,
government spending on infrastructure projects can create new physical capital, such as
roads, bridges, and buildings. So, Statement 2 is correct.
18. Which among the following is/are the possible consequences of a higher fiscal deficit ?
1. Increase in bond yield
2. The Government levying more taxes
3. Crowding out of the private investment
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
EXPLANATION:
Fiscal deficits are negative balances that develop whenever a government spends more within the
same fiscal year than it earns. This mismatch, often known as the budget deficit or the current account
deficit,
A higher fiscal deficit can have several consequences for an economy, including:
➢ Higher government debt can burden the economy in the long term.
➢ Inflation: When the Government spends more than it earns, it may have to print more money
to cover the shortfall. It can lead to inflation, as the increase in the money supply reduces the
value of each unit of currency.
➢ Higher Government debt and Higher inflation lead the Government to levy more taxes. So,
➢ Higher interest rates: A higher fiscal deficit can make it more expensive for the Government to
borrow money from investors. This can lead to higher interest rates, discouraging private
investment and reducing economic growth.
➢ Interest rates and Bond prices are inversely related. When interest rates go up, bond prices go
down, and when interest rates go down, bond prices go up.
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o Bond yield is the return on the bond an investor will get by investing in a bond. Bond
yield is inversely proportional to Bond price. As bond prices increase, bond yields fall.
➢ An increase in fiscal deficit can lead to an increase in bond yield: If the Government is spending
more than it earns, it may have to borrow money by issuing bonds. If the market perceives
that the fiscal deficit is too high, it may demand a higher interest rate on the bonds to
compensate for the risk of default. This results in an increase in bond yield. So, Statement 1
is correct.
➢ Crowding out private investment: If the Government is borrowing a lot of money, there may be
less money available for private investment. This can lead to a reduction in private sector
growth and innovation, which can be detrimental to the economy in the long term. So,
19. With reference to Programme Budgeting, Consider the following statements

1. It measures both the amount and the quality of work done, which is used to decide the money, the
department receives in future
2. It enables the legislature to exercise control over the executive in a better way
Which of the statements given above is/are correct ?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
Performance budgeting, also called program budgeting, is a special tool for development
administration. Performance budgeting presents government operations in terms of "functions,
programs, activities and projects" (ARC, 1967). It gives administrators a high level of personal
responsibility in using budgeted resources.
The central points of performance budgeting are:
(1) the amount of work done is measured; and
(2) The work's quality (or the results) is measured.
These two measures impact how much money a department will receive in the future
According to Viswanathan (1972), performance budgeting is "a comprehensive operational document,
conceived, presented and implemented in terms of programs, projects and activities, with their
financial and physical aspects closely interwoven." Among the purposes sought to be achieved by
performance budgeting, the following are the most important:
➢ to link the programming and budgeting together so that it serves as a management tool;
➢ to enable the legislature to exercise control over the executive in a better way;
➢ to help in the formulation and review of policy and plans for integration with the budget;
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➢ to supply yardsticks of efficiency; and
➢ to facilitate effective accounting and audit. So, Statement 2 is correct
20. With reference to outcome-based budgeting, consider the following statements

1. It measures the physical quantity of the goods or services produced through a government
scheme or programme.
2. It was first introduced in the New economic policy of 1990
Which of the statements given above is/are not correct ?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
An outcome budget measures the progress of each department and ministry and what they have done
with their allocated budget. It measures quantitative and qualitative aspects of the budget. It differs
from the output budget, which measures the physical quantity of the goods or services produced
through a government scheme or program. For example, constructing a health care center is the
'output,' while an increase in the literacy rate is the 'final outcome' or 'impact.' So, Statement 1 is
not correct.
Outcomes or impact are the results of various government initiatives. Going beyond mere 'outputs,'
they cover the quality and effectiveness of the goods or services. The outcome budget is a progress
card on what various departments have done with the amount assigned in the previous annual
budget. It measures the outcomes of all government programs and whether the money has been spent
for the purpose it was sanctioned. It was first introduced in 2005-06 by the finance minister, P
Chidambaram. So, Statement 2 is not correct.
21. Which among the following is considered the Golden rule of Public Finance ?
(a) Improving the predictability of government macro-fiscal policy
(b) Allowing the space for the Government through fiscal policy to respond to internal and external
volatilities.
(c) Maintaining fiscal discipline through higher tax revenue and reduced government spending
(d) Government should borrow for investment expenditure and not for consumption spending
EXPLANATION:
The Golden Rule is a guideline for the operation of fiscal policy. The Golden Rule states that over
the economic cycle, the Government will borrow only to invest and not to fund current spending. In
other words, the Government should borrow money only to make investments that will produce long-
term benefits for the future. Tax revenues should fund current spending. The Golden Rule aims to
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balance spending, taxation, and borrowing to ensure economic stability, growth, and long-term
prosperity. Governments need to abide by the golden rule of public finance to prevent the
accumulation of excessive debt that could lead to financial instability, inflation, and economic crises.
22. Consider the following statements:

Statement 1: Earnings from the sale of a stake in a public-sector undertaking are not part of the
Revenue receipt
Statement 2: Revenue Receipt cannot cause a reduction in the assets of the Government
Which one of the following is correct in respect of the above statements ?
(a) Both Statement 1 and Statement 2 are correct, and Statement 2 is the correct explanation
for Statement 1
(b) Both Statement 1 and Statement 2 are correct, but Statement 2 is not the correct explanation for
Statement 1
(c) Statement 1 is correct, but Statement 2 is not correct
(d) Statement 1 is not correct, but Statement 2 is correct
EXPLANATION:
Revenue receipts can be defined as those that neither create any liability nor cause any reduction in
the Government's assets. They are regular and recurring, and the Government receives them in
normal activities. Revenue receipts include the proceeds from taxes and other duties levied by the
Centre, the interest and dividend it receives on its investments, and the Government's fees for its
services.
Revenue receipts must satisfy two basic conditions:
➢ No liability: Revenue receipts do not create any liability for the Government. For example, taxes
the Government receives, unlike borrowings, do not create any liabilities for it.
➢ No asset reduction: Revenue receipts do not lead to any reduction in the Government's assets.
So, the Government cannot show its earnings from the sale of a stake in a public-sector
undertaking as revenue receipts because the stake sale resulted in the reduction of its assets.
So, option (a) is correct.
23. With reference to Revenue Receipts, which among the following have been referred to as "paper tax."
1. Custom duty
2. Estate duty
3. Gift tax
4. Corporate tax
5. Wealth tax
(a) 1 and 4 only
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(b) 2, 3 and 5 only
(c) 3, 4 and 5 only
(d) 1, 2, 3, 4 and 5
EXPLANATION:
Revenue receipts are those receipts that do not lead to a claim against the Government. They are
therefore termed non-redeemable. They are divided into tax and non-tax revenues. Tax revenues, an
important component of revenue receipts, have for long been divided into direct taxes (personal income
tax) and firms (corporation tax), and indirect taxes like excise taxes (duties levied on goods produced
within the country), customs duties (taxes imposed on goods imported into and exported out of India)
and service tax.
Other direct taxes like wealth tax, gift tax and estate duty (now abolished) have never brought in a
large amount of revenue and thus have been referred to as 'paper taxes.' Taxes that carry their
significance only on paper and do not have significance in revenue yield are referred to as paper taxes.
So, option (b) is correct
24. Which among the following is/are the component of Non-Tax revenue receipts ?
1. Revenue from Cess and Surcharge
2. Dividends and profits of government investment
3. Cash grants-in-aid to the Government from international organizations
Select the correct answer using the code given below:
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
EXPLANATION:
Tax revenue is charged on income earned by an individual or an entity (direct tax) and on the value
of transactions of goods and services (indirect tax). On the other hand, non-tax revenue is charged
against services provided by the Government. Non-tax revenue becomes payable only when services
offered by the Government are availed.
➢ Non-tax revenue of the central Government mainly consists of
➢ Dividends and profits: This includes dividends and profits from PSEs and the transfer of
surplus from the Reserve Bank of India. So, Statement 2 is correct.
➢ Cash grants-in-aid from foreign countries and international organizations are also included.
➢ Interest: Interest receipts (on account of loans by the central Government which constitutes
the single largest item of non-tax revenue). It comprises interest on loans given to states and
union territories for reasons like non-plan schemes (e.g., flood control) and planning schemes
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with a maturity period of 20 years, such as modernization of police forces and also interest on
loans advanced to Public Sector Enterprises (PSEs), Port Trusts and other statutory bodies etc.
➢ Petroleum license: This includes fees to get the exclusive right for exploration in a particular
region. Such fees may be in the form of royalty, a share of the profit earned from contact areas
during a specific period, a Petroleum Exploration License (PEL) fee or Production Level
Payment (PLP).
➢ Fees for Communication Services: This mainly includes the license fees from telecom operators
on account of spectrum usage charges that licensed Telecom Service Providers to pay to the
Department of Telecom (DoT).
➢ Road and Bridges usage fees include receipts through toll plazas for using national highways,
permanent bridges, etc.
➢ Examination fees include fees paid by applicants of competitive examinations conducted by
the Union Public Service Commission (UPSC) and Staff Selection Commission (SSC) to fill up
vacancies in government offices.
➢ Fee for police services: This includes fees received for supplying central police forces to state
governments and other parties like Central Industrial Police Force (CISF) to industries etc.
➢ Sale of stationery, gazettes etc.: This includes receipts under 'Stationery and Printing' relating
to the sale of stationery, gazettes, government publications, etc.
➢ Fee for Administrative Services: This includes fees received for providing services like audit
services, issuance of passports, visas etc.
A surcharge is a tax imposed on the tax payable to make the tax structure more progressive. It is
imposed on the person who is earning a higher income.
Cess: Cess is similar to a surcharge but is a temporary levy to achieve a specific objective, such as
education and infrastructure. It can be imposed both direct and indirect. Thus, cess and surcharge
are part of tax revenue. So, Statement 1 is not correct.
25. With reference to Union Budget, consider the following statements

1. The Government's spending toward the acquisition of the intangible asset is part of capital
expenditure
2. The government spending towards the upgradation or repair of existing assets is part of revenue
expenditure
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
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EXPLANATION:
Capital expenditure, which leads to the creation of assets, is long-term and allows the economy to
generate revenue for many years by adding or improving production facilities and boosting operational
efficiency. It also increases labor participation, takes stock of the economy and raises its capacity to
produce more in the future.
➢ Capital spending is associated with investment or development spending, where expenditure has
benefits extending years into the future. Capital expenditure includes money spent on the
following:
• Acquiring fixed and intangible assets. So, Statement 1 is correct.
• Upgrading an existing asset
• Repairing an existing asset
• Repayment of loan
Along with creating assets, loan repayment is also a capital expenditure, as it reduces liability. Thus,
government spending towards the upgradation or repairing existing assets is part of capital
expenditure (not revenue expenditure). So, Statement 2 is not correct.
Revenue expenditure refers to the expenses incurred by the Government to maintain day-to-day
operations and provide public services, such as salaries for government employees, healthcare,
education, and social welfare programs. Reducing revenue expenditure can help to reduce the budget
deficit of a country. This can be done by cutting back on non-essential services and programs, finding
ways to operate more efficiently, and reducing the size of the government workforce
26. With reference to Union Budget 2023- 24, consider the following statements:
1. Revenue expenditure consists of the majority of the total government expenditure
2. Interest payments occupy one-fourth of total government expenditure
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
Revenue expenditure is for the normal running of Government departments and various services,
interest payments on debt, subsidies, etc. Broadly the expenditure which does not result in the
creation of assets for the Government of India is treated as revenue expenditure. All grants given to
State Governments/Union Territories and other parties are also treated as revenue expenditure, even
though some of the grants may be used to create assets.
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Revenue expenditure consists of the majority of the total government expenditure. So, Statement 1
is correct
Interest payments occupy one-fifth(20%) of total government expenditure. So, Statement 2 is not
correct.
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27. With reference to Central Government borrowings, consider the following statements
1. As per the Indian Constitution, the Government of India's external borrowing is limited only to
external assistance from bilateral and multilateral limitations
2. India's external debt was higher than the internal debt at the time of the 1991 BoP crisis
Which of the above statement is/are correct ?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
Under the Constitution, the Central Government, but not State Governments, can access external
debt. However, the Government of India has not been borrowing externally on commercial terms so
far. Its borrowings have been limited to external assistance, mainly from other Governments and
multilateral sources such as IBRD, IDA, etc. Public enterprises could, however, resort to external
borrowings on concessional terms also through lending arrangements with Government, though more
recently, intermediation of the Government has been dispensed with.
Although the Government of India's external borrowing is limited to external assistance from
bilateral and multilateral limitations, there is no constitutional mandate . So, Statement 1 is
not correct.
External debt is usually raised in foreign currency, and a substantial part of it is also repayable in
foreign currency. The Government of India has raised foreign loans from several countries like the
USA, UK, France, former USSR, Germany, and Japan, as International financial institutions like IMF,
IBRD and IDA etc. In contrast, Internal debt includes: (a)current market loans, (b)bonds, (c)Treasury
Bills, (d)special floating and other loans, (e)Special securities issued to the reserve Bank of India,
(f)Ways and means Advances, (g)Securities against small savings, (h)Small savings, (i) Provident
Funds, (j) Other accounts and (k)Reserve Funds and Deposits. During the 1991 BoP crisis, India's
internal debt was higher than the external debt. So, Statement 2 is not correct
28. With reference to Government Securities Lending (GSL) as per Draft RBI (Government Securities Lending)
Directions 2023, Consider the following statements :
1. The transactions under GSL shall be undertaken for a minimum period of one day and a
maximum period of ninety days
2. Government securities issued by both central and state governments are eligible for placing as
collateral under GSL transaction
3. Only the scheduled commercial banks are eligible to participate as lenders of securities in GSL
transactions
(a) 1 and 2 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
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EXPLANATION:
Government Securities Lending (GSL) transaction" refers to dealing in government securities involving
lending of eligible Government securities for a GSL fee by the owner of those securities (the lender) to
a borrower, on the collateral of other Government securities, for a specified period of time, with an
agreement that the borrower shall return the security borrowed to the lender and the latter shall
return back the security received as collateral to the former at the end of the agreed period.
➢ Government Securities Lending (GSL) transactions shall be undertaken for a minimum period of
one day and a maximum period of ninety days.
So, Statement 1 is correct
The Eligible securities under the GSL transaction include the following:
(1) Government securities issued by the Central Government, excluding Treasury Bills, shall be eligible
for lending/borrowing under a GSL transaction.
(2) Government securities issued by the Central Government (including Treasury Bills) and the State
Governments shall be eligible for placing as collateral under a GSL transaction. So, Statement 2 is
correct
An entity eligible to undertake repo transactions in government securities and any other entity
approved by the Reserve Bank would be eligible to participate in GSL transactions as a lender of
securities. So, Statement 3 is not correct.
29. The RBI's Retail Direct Online Portal facilitates buying and selling of which among the following
1. Treasury Bills
2. Sovereign gold Bonds
3. State Development Loans
Select the correct answer using the code given below :
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
EXPLANATION:
Retail Direct Scheme is a one-stop solution to facilitate investment in Government Securities by
individual investors. Under this scheme, individual retail investors can open a Gilt Securities Account
– "Retail Direct Gilt (RDG)" account with RBI.
The kinds of Government securities that can be invested in through the Retail Direct platform include:
i. Government of India Treasury Bills (T-Bills)
ii. Government of India dated securities (dated G-Sec)
iii. State Development Loans (SDLs)
iv. Sovereign Gold Bonds (SGB)
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30. With reference to Ways and Means Advances (WMA), consider the following statement:
1. It is the loan facility for both central and state governments to borrow from the RBI
2. The interest rate on WMA is the penal rate which is 1% above the repo rate
3. The limits of WMA are solely decided and revised periodically by the RBI
Which of the statements given above is/are not correct ?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 2 only
EXPLANATION:
Ways and Means Advances is a facility for the Centre and states to borrow from the RBI. These
borrowings are meant to help them tide over temporary mismatches in cash flows of their receipts and
expenditures. In that sense, they aren't a source of finance per se. Section 17(5) of the RBI Act, 1934
authorizes the central bank to lend to the Centre and state governments subject to their being
repayable "not later than three months from the date of the making of the advance." So, statement 1
is correct.
The interest rate on WMA is the RBI's repo rate, which is basically the rate at which it lends short-
term money to banks. That rate is currently 4.4%. However, governments are allowed to draw amounts
in excess of their WMA limits. The interest on such overdraft is 2 percentage points above the repo
rate, which now works out to 6.4%. Further, no state can run an overdraft with the RBI over a certain
period. So, statement 2 is not correct.
The limits for Ways and Means Advance are mutually decided by the Government and RBI and revised
periodically. The limits for financial accommodation extended by the Reserve Bank of India to State
Governments / Union Territories (UTs) through Ways and Means Advances (WMA), Special Drawing
Facility (SDF) and Overdraft (OD) schemes were last reviewed and announced in October 2021.
Considering the uncertainties related to the ongoing pandemic, it was decided to continue with the
higher WMA limit of ₹51,560 crores for all States. So, statement 3 is not correct.
31. With reference to Floating Rate Savings Bonds, which among the following statement is not correct ?
(a) It was launched by the Government to attract investment from Non-resident Indians
(b) The investment in these bonds can be either in cash or any electronic payment
(c) The bonds are not eligible for trading in the secondary markets
(d) There is no maximum limit in investment in these bonds
EXPLANATION:
Generally, bonds come with a fixed coupon or interest rate. For example, you can buy a bond of
Rs.10,000 with a coupon rate of 5%. In the case of such a bond, you will be paid an annual interest
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amount of Rs 500 by the bond issuer. This interest is constant and does not fluctuate based on the
current interest rate of the market.
However, a floating rate bond is a debt instrument that does not have a fixed coupon rate, but its
interest rate fluctuates based on the benchmark the bond is drawn. Benchmarks are market
instruments that influence the overall economy. For example, repo rate or reverse repo rate can be set
as benchmarks for a floating rate bond.
➢ The bonds are available for subscription from July 1, 2020, onwards. As per the Reserve Bank
of India (RBI) press release, the interest rate on these bonds will be reset every six months, the
first reset being on January 01, 2021. There is no option to pay interest on a cumulative basis,
i.e., interest will be payable every six months instead of having the option to receive it at
maturity.
➢ Individuals (including Joint Holdings) and Hindu Undivided Families (HUF) are eligible to
invest in these bonds. NRIs cannot invest in these bonds. So, option (a) is not correct.
➢ There will be no maximum limit for investment in the bonds. The minimum investment starts
from Rs 1,000 and, in multiples of Rs 1,000, thereof.
➢ The bonds shall be repayable on the expiration of seven years from the date of issue. Premature
redemption shall be allowed for specified categories of senior citizens. This is similar to the
earlier withdrawn 7.75% RBI Taxable Bonds.
➢ The interest rate on these bonds is linked to the National Savings Certificate (NSC), with a
spread of over 0.35% over the respective NSC rate. Thus, any change in the NSC rate by the
Government will impact the interest payable on these bonds.
➢ Interest received from these bonds will be taxed as per the income tax slab applicable to your
income. Further, TDS will be applicable to the interest income.
➢ The bonds are not eligible for trading in the secondary market and cannot be used as collateral
for loans from banks, financial institutions, NBFCs etc.
➢ A sole holder or a sole surviving holder of a bond, being an individual, can make a nomination.
➢ The bonds in the form of BLA shall not be transferable except transfer to a nominee(s)/legal
heir in case of death of the holder of the bonds.
32. The largest share of India's multilateral borrowing is from

(a) International Bank Reconstruction and Development
(b) International Developmental Association
(c) Asian Development Bank
(d) New Development Bank
EXPLANATION:
The creditor-wise composition of multilateral debt in end-March 2022 and 2021 is given in Figure 3.5
below. It may be seen that International Development Association (IDA), at US$ 20.7 billion as of end-
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March 2022, continued accounting for the bulk of the multilateral debt with a share of 34.1 percent.
However, the IDA share witnessed continuous erosion over the years, compensated by the consistent
rise in the share of ADB. The debt from ADB, with a share of 29.4 percent of the multilateral debt,
grew by 10.3 percent to US$ 17.8 billion as of end-March 2022 from US$ 16.1 billion a year ago. So,
option (b) is correct.
Debt from International Bank for Reconstruction and Development (IBRD), accounting for a share of
24.7 percent of the multilateral debt, increased by 9.5 percent to US$ 14.9 billion as of end-March
2022 from US$ 13.6 billion a year ago. New Development Bank (NDB) is fast emerging as an important
source of multilateral loans. Debt from NDB stood at US$ 3.3 billion as of end-March 2022, against
US$ 0.2 billion as of end-March 2019.
33. Economic Survey 2023 highlights India's public debt profile as relatively stable. Which among the
following is/are the possible contributing factor?
1. Reduction of Debt to GDP ratio to pre-Covid levels
2. Lower currency risk
3. Lower interest risk
Select the correct answer using the code given below :
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
EXPLANATION:
India's debt portfolio is relatively stable owing to low currency and interest rate risks, according to the
Economic Survey 2022-23. Of the Union government's total net liabilities in end-March 2021, 95.1%
were denominated in domestic currency, while sovereign external debt constituted 4.9%, implying low
currency risk, the survey says.
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"Public debt in India is primarily contracted at fixed interest rates, with floating internal debt
constituting only 1.7% of GDP in end-March 2021. The debt portfolio is, therefore, insulated from
interest rate volatility, which also provides stability to interest payments," says the Economic Survey.
So, statements 2 and 3 are correct.
➢ Given the unprecedented fiscal expansion in 2020, rising government liabilities have emerged
as a significant concern across the globe. The IMF projects the global government debt at 91%
of GDP in 2022, about 7.5 percentage points above the pre-pandemic levels.
➢ For India, the total liabilities of the Union government, which were relatively stable as a
percentage of GDP over the past decade, witnessed a sharp spike in the pandemic year FY21.
This spike in debt resulted from the pandemic-induced higher Government borrowings to
finance the additional expenditure needs, given the strained revenues and sharp contraction
in the GDP.
➢ The General Government Debt to GDP ratio increased from 75.7% at the end of March 2020
to 89.6% at the end of the pandemic year FY21. It is estimated to decline to 84.5% of GDP by
end-March 2022.
➢ The high fiscal Deficit to GDP ratio witnessed in the aftermath of the pandemic is a concern
for countries worldwide, the survey says.
So, statement 1 is not correct.
34. With reference to Fiscal deficit, consider the following statements

1. It indicates the additional amount of financial resources needed to meet government expenditure
2. An increase in fiscal deficit increases the present liability and decreases the future liability of the
Government.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
A fiscal deficit is the excess of total expenditure over total receipts excluding borrowings during a fiscal
year.
➢ Fiscal deficit = Total budget expenditure – Total budget receipts excluding borrowings.
Fiscal deficit shows the borrowing requirements of the Government during the budget year. The fiscal
deficit reflects the Government's borrowing requirements for financing the expenditure, including
interest payments. A fiscal deficit indicates the additional amount of financial resources needed to
meet government expenditures. So, statement 1 is correct.
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An increase in fiscal deficit increases the present liability and increases the future liabilities of the
Government on interest payments and loan repayment. The Government has to pay back the borrowed
amount with interest in the future. Consequently, the Government has to either borrow more from
the people or tax people more in the future to pay interest and loan amount. So, statement 2 is not
correct.
35. With reference to Effective Revenue Deficit, consider the following statements
1. The concept of Effective revenue deficit was introduced by Rangarajan Committee
2. It is the difference between fiscal deficit and the grants used by the states in the creation of capital
assets
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
During the 2011-12 Budget, the Rangarajan Committee on Public Expenditure developed the idea of
an effective revenue deficit in India. The 'effective revenue deficit' was introduced in Budget 2012,
which excludes those revenue expenditures (or transfers) in the form of grants for the creation of
capital assets. Effective Revenue Deficit was established as a financial indicator in 2012-13. So,
statement 1 is correct.
The effective revenue deficit is the difference between the revenue deficit and grants for capital asset
creation. Every year, the Center gives grant-in-aid to the state and Union Territories, and with these
grants, they construct capital assets; however, this capital is not contributed to the Central
Government's capital expenditure. As a result, an effective revenue deficit has been created to measure
such expenditure. Revenue expenditures in the form of grants for capital asset creation are not
included in the Effective Revenue Deficit.
Effective revenue Deficit = Revenue Deficit - Grants in aid for capital assets
The revenue deficit refers to the excess of the Government's revenue expenditure over revenue
receipts. Revenue expenditure - which refers to money needed for the day-to-day operation of
Government, interest payments on debt, and grants given to state governments and other parties
should be covered by revenue receipts - which consist of money earned by the Government from tax
revenue and non-tax revenue. If there is a shortfall in that revenue, then this amount is called revenue
deficit. So, statement 2 is not correct.
36. When the primary deficit is zero, it indicates

(a) The Government has repaid all the loans borrowed in its previous financial years
(b) The Government has not incurred any fresh borrowing in the current fiscal year
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(c) The Government has resorted to borrowing only to pay off the interest payment
(d) The total revenue of the Government is much higher than its borrowing
EXPLANATION:
Primary deficit is measured to know the amount of borrowing the Government can utilize, excluding
the interest payments.
➢ The primary deficit is the difference between the current year's fiscal deficit (total income- total
expenditure of the Government) and the interest paid on the borrowings of the previous year.
When the primary deficit is zero, the fiscal deficit becomes equal to the interest payment. This means
that the Government has resorted to borrowing just to pay off the interest payments. Further, nothing
is added to the existing loan.
A decrease in primary deficit shows progress towards fiscal health. So, option (c) is correct.
37. With reference to Budget Estimate for 2023-24, Arrange the following deficits (in terms of % of GDP) in
ascending order
1. Primary Deficit
2. Revenue Deficit
3. Effective Revenue Deficit
(a) 1-2-3
(b) 3-1-2
(c) 1-3-2
(d) 3-2-1
EXPLANATION:
Primary Deficit: Primary Deficit is a fiscal deficit minus interest payments on previous borrowings.
The primary deficit shows the Government's borrowing requirements for meeting expenditures,
excluding interest payments.
Revenue Deficit: It refers to the excess of total revenue expenditure of the Government over its total
revenue receipts. Revenue deficit = Total Revenue expenditure – Total Revenue receipts.
(36-F)
SIA-F-GS I
Effective Revenue Deficit: The effective revenue deficit is the difference between the revenue deficit
and grants for capital asset creation.
So, option (b) is correct.
38. Which among the following is considered the direct monetization of deficit ?
(a) RBI buys government securities in the primary market to finance the spending need of the
Government
(b) Commercial banks purchase ad-hoc treasury bills at higher yield
(c) Use of Public sector undertaking revenues to meet the fiscal Deficit of the Government
(d) Citizens of a country directly subscribe to the government bonds in the primary market to manage
the Government's Deficit
EXPLANATION:
Direct Monetized deficit is the monetary support the Reserve Bank of India (RBI) extends to the Centre
as part of the Government's borrowing programme. In other words, the term refers to the purchase of
government bonds by the central bank to finance the spending needs of the Government.
Also known as debt monetisation, the exercise leads to an increase in total money supply in the
system, and hence inflation, as RBI creates fresh money to purchase the bonds. The same bonds are
later used to bring down inflation as they are sold in the open market. This helps RBI suck excess
money out of the market and rein in rising prices.
So, option (a) is correct.
39. With reference to fiscal consolidation in India, consider the following statements:
1. The need for fiscal consolidation in India was pronounced by the first prime minister of India
2. Fiscal consolidation is legally mandated by the Act of Parliament in India
3. Better fiscal consolidation can promote growth in the country
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
EXPLANATION:
Fiscal consolidation refers to the ways and means of narrowing the fiscal deficit. A government
typically borrows to bridge the deficit. It will then have to allocate a part of its earnings to service the
debt. The interest burden will increase as the debt increases. In the Budget for FY22, of the total
government expenditure of over ₹34.83 lakh crore, more than 8.09 lakh crore (around 20 percent)
went towards interest payment. Debt is one liability that is difficult to defer, and, at the end of the
(37-F)
SIA-F-GS I
day, the Government struggles to find more resources for capital and revenue expenditure. In the long
run, the uncontrolled fiscal deficit will hurt economic growth.
The seeds for fiscal consolidation were sown in 1994 by the then Finance Minister Manmohan Singh.
In his budget speech for FY95, he highlighted the need for fiscal discipline and pronounced a policy
to end monetizing the deficit. Till then, the Government was financing its deficit by creating money,
through unlimited recourse to the Reserve Bank, by issuing ad hoc treasury bills. This weakened the
Reserve Bank's ability to direct effective monetary policy. Singh announced phasing out ad hoc
treasury bills, after which the Government would fund its deficit through market borrowings. So,
statement 1 is not correct.
As open market borrowings piled up to fund the Deficit, Yashwant Sinha, in his budget speech for
FY2001, called for a strong institutional framework to ensure fiscal responsibility. This resulted in the
enactment of the 'Fiscal Responsibility and Budget Management (FRBM) Act, 2003', which mandated
limiting the fiscal deficit to 3 percent of GDP. So, statement 2 is correct.
Many economists have said speedier economic growth depends on limiting the fiscal deficit. High fiscal
deficit will increase borrowings, and the interest burden would curtail the Government's ability to
spend productively. Also, increased government borrowing will crowd out the private sector in the debt
market, leading to higher interest rates, which will hurt growth. Other economists have argued that
fiscal consolidation is not a fiscal compression mechanism but an expenditure-switching mechanism.
The original FRBM Act of 2003, they say, pushed for shifting the expenditure from revenue to capital,
which will lay the foundation for higher growth. So, statement 3 is correct.
40. Consider the following statements regarding the International counter - ransomware initiative.
1. UNGA resolution paved the way for the setting up of the initiative.
2. India is a key member of the grouping.
3. The international counter ransomware task force under the initiative aims to counter illicit finance.
Which of the above statements is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
EXPLANATION:
Ransomware is malware that encrypts a victim's files, rendering them inaccessible, and demands
payment (usually in cryptocurrency) in exchange for the decryption key. Ransomware is typically
delivered through phishing emails, malicious downloads, or exploits of unpatched software
vulnerabilities. The United States National Security Council (NOT UNGA )hosted the International
Counter Ransomware Initiative CRI summit in Washington, DC, to counter ransomware attacks and
advance the global cybersecurity agenda.
(38-F)
SIA-F-GS I
The International Counter Ransomware Initiative (CRI), a grouping of 36 countries, including India
and the European Union, has decided to deepen its institutional collaboration to enhance "collective
resilience" to ransomware, disrupt attacks and pursue responsible actors, counter illicit finance that
underpins the ransomware ecosystem, work with the private sector against attacks, and cooperate
across all elements of the ransomware threat. India leads the network resilience working group of the
initiative along with Lithuania. So, Statement 2 is correct.
At the most recent conference, International Counter Ransomware Initiative (CRI) is also determined
to create an International Task Force to combat ransomware and coordinate resilience disruption. So,
41. Regarding Multimodal Logistics parks (MMLP) which of the following statements is/are correct ?
1. For MMLPs, the model concession agreement for PPP is on an Engineering Procurement
Construction (EPC) model.
2. National Highway Logistics Management (NHLM) oversees the implementation of MMLPs.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
MMLPs are logistical facilities developed with support from state and union government agencies and active
collaboration from the private sector. They are envisioned to have the necessary infrastructure to support
containerized cargo, bulk cargo, liquid cargo, grain silos, and other logistics modes based on regional
economic needs and facilitate seamless logistics operations. The private sector would set up and operate
logistics, preferably under a Design Build Operate Transfer (DBOT) model. So, Statement 1 is not
correct.
MMLP Launched in 2017 under the Logistics Efficiency Enhancement Programme (LEEP) of the Ministry
of Road Transport and Highways (MoRTH), MMLP has become the most important transformational
multimodal project of the Indian Government. The recently launched National Logistics Policy 2022
envisages the development of MMLPs for improved connectivity and efficiency.
National Highway Logistics Management (NHLM), a 100% owned SPV of the National Highway
Authority of India, is directed by the Ministry of Road Transport and Highways (MoRTH) to oversee the
implementation of MMLPs. So, Statement 2 is correct.
42. Consider the following statements regarding Shadani durbar.

1. Raja Ranjit Singh built it to meet people to address their grievances.
2. The celebrations here witness the recitations of the Gita, Ramayana and the Guru Granth Sahib.
(39-F)
SIA-F-GS I
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
Under the 1974 India-Pakistan Protocol, pilgrims from both countries get visas to visit certain religious
shrines without going through the usual immigration process. The pilgrims can travel only in groups,
and the number of such groups is fixed each year. Shadani Darbar is located in Hayat Pitafi, Ghotki
district, Pakistan. Shadani Darbar is believed to be the biggest Hindu temple in Pakistan's Sindh
province. The Indian pilgrims, apart from visiting Shadani Darbar, will travel to shrines in Jarwar,
Adilpur, Khanpur and Mehar among others, and also visit the Nankana Sahib. Shadani Darbar was
founded in 1786 by Sant Shadaram Sahib, not Raja Ranjit Singh.
The annual celebrations at Shadai Darbar include 'agni pooja,' or fire worship. Mass weddings are
organized, where well-off devotees provide dowry and gifts for financially weak couples. The
celebrations will also see the recitation of the Gita, the Ramayana and the Guru Granth Sahib. So,
43. Which of the following pairs are correctly matched?

1. Kapadaganda shawls Odisha
2. Kantha shawls. West Bengal
3. Kinnauri shawls Himachal Pradesh
4. Telia Rumal. Telangana
Select the correct answer from the code given below.
(a) One Pair only
(b) Two Pair only
(c) Three Pair only
(d) Four Pair only
EXPLANATION:
Kapadaganda shawls (Odisha), the women of the Dongria Kondh tribe of Odisha, weave a shawl.
These shawls are entirely handmade on a coarse white fabric that the Dongria Kondh buys from the
Domb community in exchange for crops. So, Statement 1 is correct.
Kantha shawls (West Bengal) are the ancient embroidery technique of West Bengal; the Kantha is a
brilliant example of India's time-consuming, meticulous, intricate embroidery traditions. Kantha is a
centuries-old form of stitching rags together to form patchwork clothes. So, Statement 2 is correct.
Kinnauri shawls are a type of traditional shawl made in the Kinnaur district of Himachal Pradesh,
India. They are known for their intricate designs, vibrant colors, and fine texture. The local Kinnauri
(40-F)
SIA-F-GS I
weavers hand-woven the shawls using wool from the high-altitude sheep native to the region. So,
Telia Rumal of Nalgonda,Telangana.Telia Rumal is a unique tie and dye technique that uses oil to
treat the yarn, helps it retain softness, and has a distinct smell of gingelly oil. So, Statement 4 is
correct
44. Which of the following is correct regarding Aceclofenac, recently seen in the news ?
1. It is a non-steroidal anti-inflammatory drug.
2. It is used as a pain relief drug.
3. It does not cause any side effects.
(a) 1 and 2 only
(b) 1 only
(c) 2 and 3 only
(d) 1, 2 and 3
EXPLANATION:
Aceclofenac is a non-steroidal agent with marked anti-inflammatory and analgesic properties.
Aceclofenac is used for pain relief. So, Statements 1 and 2 are correct.
It relieves pain and inflammation in conditions like rheumatoid arthritis, ankylosing spondylitis, and
osteoarthritis. It works by inhibiting the production of certain chemicals in the body, called
prostaglandins, which are responsible for causing pain, swelling, and inflammation.
Long-term use and high doses of Aceclofenac may cause renal problems, such as protein or blood in
urine and pain during urination. Common side effects of Aceclofenac include Nausea, Diarrhea,
Abdominal pain, Dyspepsia, and increased liver enzymes.
45. Which of the following pairs of Biodiversity heritage sites is/are correct?
1. Arittapatti. A. Kerala
2. Hajong Tortoise lake B. Assam
3. Naro hills. C. Madhya Pradesh
4. Ameenpur lake. D. Andhra Pradesh
(a) One pair only
(b) Two pairs only
(c) Three pairs only
(d) Four pairs only
(41-F)
SIA-F-GS I
EXPLANATION:
Biodiversity Heritage Sites (BHS) are areas that are ecologically unique, have significant historical,
cultural or spiritual value, and are important for the conservation of biological diversity. In India,
Biodiversity Heritage Sites are recognized and conserved under the Biological Diversity Act 2002.
Arittapatti Biodiversity Heritage Site in Tamil Nadu has rich biological and historical significance with
the presence of around 250 bird species, including 3 flagship Raptor species - Laggar Falcon, Shaheen
Falcon, Bonelli's Eagle and wildlife like Indan Pangolin, Python and Slender Loris. So, Pair 1 is not
correct.
Hajong Tortoise Lake at Assam is a natural habitat of the Critically Endangered freshwater 'Black
Softshell turtle' Nilssonia nigricans, and the Endangered 'Indian Peacock Softshell turtle' Nilssonia
hurum, besides other major flora and fauna.
So, Pair 2 is correct.
Naro Hills in the State of Madhya Pradesh has Unique and varied geology, and it supports a large
number of ecosystems and species of Flora and Fauna. So, Pair 3 is correct.
Ameenpur lake is a freshwater lake in the Sangareddy district of the Indian state of Telangana.
Ameenpur Lake has been recognized as an Important Bird Area (IBA) by BirdLife International. So,
Pair 4 is not correct.
46. Consider the following statements regarding Breakthrough Agenda, which recently seen in the news.
1. Small island developing countries launched it recently during COP 27.
2. It is an international clean technology plan to keep the temperature rise to 1.5 degrees Celsius.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
The Breakthrough Agenda is a master plan to accelerate the decarbonization of five major sectors.
Breakthrough Agenda, launched by a coalition of 45 world leaders, whose countries collectively
represent over 70% of global GDP, at the COP26 World Leaders' Summit. So, Statement 1 is not
correct.
The first set of government-led Breakthrough goals launched at COP26 (known as the 'Glasgow
Breakthroughs') covered five key Emitting sectors that together represent more than 50% of global
emissions.
Breakthrough Agenda Report 2022 was published in September, warning that an "international
collaboration gap" threatens to delay net zero by decades. At COP27, countries responded to these
recommendations with a package of 28 Priority Actions to decarbonize the power, road transport,
steel, hydrogen, and agriculture sectors in line with the goals of the Paris Agreement.
(42-F)
SIA-F-GS I
The Paris Agreement 2015 commits the world to limit the rise in global temperature to well below 2°C
and pursue efforts to limit it to 1.5°C (compared to pre-industrial levels).
The Breakthrough Agenda is an unprecedented international clean technology plan to help keep 1.5°C
within reach. It provides a framework for countries, businesses,, and civil society to join and
strengthen their actions every year in key emitting sectors through a coalition of leading public, private
and public-private global initiatives. So, Statement 2 is correct.
47. Which of the following is correct regarding the Global Forest declaration assessment report?
(a) The food and Agriculture Organization (FAO) released it during CoP 27.
(b) It assesses progress towards halting deforestation and restoring degraded land.
(c) It is a fact-finding report without any specific recommendations.
(d) (a) & (b) & (c)
EXPLANATION:
Forest Declaration Assessment is published annually by the New York Declaration on Forests
(NYDF) Assessment since 2015 and updates on progress toward global forest goals.So, option 1 is
not correct.
The Forest Declaration Assessment is to assess progress toward the global goals of halting
deforestation and restoring 350 million hectares of degraded land by 2030 as set out in international
declarations such as the New York Declaration on Forests (2014) and the Glasgow Leaders'
Declaration on Forests and Land Use (2021). Halting deforestation and forest degradation as soon as
possible, and no later than 2030, will substantially reduce the release of terrestrial GHG emissions
into the atmosphere. Restoring forests and other ecosystems will also return significant amounts of
carbon to stored biomass and help us realize our collective 2030 targets. So, option 2 is correct.
The Forest Declaration Assessment Partners recommends that governments, companies, and financial
institutions utilize all tools at hand to substantially increase their investments in forests while also
shifting finance away from harmful activities. So, option 3 is not correct.
48. Consider the following statements regarding India Infrastructure Project Development Fund Scheme
(IIPDF).
1. It is a centrally sponsored scheme to aid infrastructure development in the country.
2. Financial assistance is provided to the private sector to meet project development costs.
3. Funding support is available to project sponsoring authorities in the central and state
governments.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
EXPLANATION:
(43-F)
SIA-F-GS I
Infrastructure Finance Secretariat, Department of Economic Affairs (DEA), Ministry of Finance,
Government of India, notifies a Scheme for Financial Support for Project Development Expenses of
PPP Projects – India Infrastructure Project Development Fund Scheme (IIPDF Scheme).
As a Central Sector Scheme, the India Infrastructure Project Development Fund Scheme (IIPDF
Scheme) will aid development of quality PPP projects by providing necessary funding support to the
project sponsoring authorities, both in the Central and State Governments, for creating a shelf of
bankable viable PPP projects for achieving the vision of modern infrastructure for the country.
The IIPDF is available to the Sponsoring Authorities for PPP projects for the purpose of meeting the
project development costs which may include the expenses incurred by the Sponsoring Authority in
respect of feasibility studies, environment impact studies, financial structuring, legal reviews and
development of project documentation, including concession agreement, commercial assessment
studies (including traffic studies, demand assessment, capacity to pay assessment) etc. required for
achieving technical close of such projects, on individual or turnkey basis, but would not include
expenses incurred by the Sponsoring Authority on its own staff . So, Statement 2 is correct.
A key step in structuring quality PPP projects is to provide quality advisory/ consultancy services to
the Project Sponsoring Authorities (PSAs). The Sponsoring Authority will, be able to source funding to
cover a portion of the PPP transaction costs, thereby reducing the impact of costs related to
procurement on their budgets.
IIPDF Scheme (India Infrastructure Project Development Fund Scheme) for providing necessary
support to the Project Sponsoring Authorities, both in the Central and State Governments, by
extending financial assistance. So, Statement 3 is correct.
49. Consider the following statements regarding the Indo-Pacific Regional Dialogue.
1. It is an annual apex-level regional strategic dialogue of the Indian Navy.
2. It is organized by the National Maritime Foundation (NMF), Indian Navy's knowledge partner.
Which of the above statements is/are correct
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
EXPLANATION:
The Indo-Pacific Regional Dialogue 2022 (IPRD-2022), the annual apex-level regional strategic
dialogue of the Indian Navy, is being conducted by the Indian Navy in New Delhi from 23 November
2022 to 25 November 2022. The annual international conference known as the IPRD, which aims to
promote discussion and idea exchange on maritime issues relevant to the region .So, Statement 1 is
correct.
(44-F)
SIA-F-GS I
The NMF was established, in 2005, as the nation's first maritime think-tank for the conduct of
independent and policy-relevant research on all 'matters maritime'. It conducts research, organizes
conferences and seminars, and publishes reports. NMF being autonomous think tank, its
organizational development is supported by the Indian Navy and the Union Ministry of Defence
The Indo-Pacific Regional Dialogue -2022 is organized by the National Maritime Foundation (NMF),
New Delhi, as the Indian Navy's knowledge partner, is being attended by over 800 participants,
including delegates from twenty friendly foreign countries and international organizations. So,
50. Consider the following statements regarding Lachit Borphukan.

1. He was the founder of the Ahom Kingdom.
2. He led the Ahom forces to victory in the Battle of Saraighat against the Mughals.
3. The Mughal ruler Aurangzeb was his contemporary.
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 2 only
EXPLANATION:
The Ahom kingdom of Assam was located in the Brahmaputra valley and it was first established in
1228. Sukaphaa (r. 1228–1268), also Siu-Ka-Pha, the first Ahom king in medieval Assam, was the
founder of the Ahom kingdom and the architect of Assam. The Ahom kings ruled large parts of what
is now known as Assam for nearly 600 years, from the early 13th century to the early 19th century.
This was a prosperous, multi-ethnic kingdom which spread across the upper and lower reaches of the
Brahmaputra valley, surviving on rice cultivation in its fertile lands. So, Statement 1 is not correct.
The kingdom was repeatedly attacked by Turkish and Afghan rulers of the Delhi Sultanate and later
the Mughal Empire. The Ahoms engaged in a series of conflicts with the Mughals from 1615-1682,
starting from the reign of Jahangir till the reign of Aurangzeb. In January 1662, where the Mughals
won a partial victory, conquering parts of Assam and briefly occupying Gurgaon, the Ahom capital.The
counter-offensive to reclaim lost Ahom territories started under Ahom King Swargadeo Chakradhwaja
Singha.
Lachit Borphukan was chosen as one of the five Borphukans of the Ahom kingdom by king
Charadhwaj Singha, and given administrative, judicial, and military responsibilities.
He led the Ahom forces to victory in the Battle of Saraighat against the Mughals.
Aurangzeb is known for being the emperor of India from 1658 to 1707. He was the last of the
great Mughal emperors. Lachit Borphukan is revered as the hero of the 1671 Battle of Saraighat
(45-F)
SIA-F-GS I
against the Mughals and preserver of Northeast Indian civilisation. The Mughal ruler Aurangzeb was
his contemporary. So, Statement 3 is correct.
(46-F)
SIA-F-GS I

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PRELIMS FITNESS – 2023

Criteria 14th FC 2015-20 15th FC 2020-21

Income Distance 50.0 45.0

Population 1971 17.5 -

Population 2011 10.0 15.0

Area 15.0 15.0

Forest Cover 7.5 -

Forest and Ecology - 10.0

Demographic Performance - 12.5

Tax Effort - 2.5

Total 100 100

S.no. Grant Components 2021-26

1 Revenue Deficit grants 294514

2 Local governments grants 436361

3 Disaster management grants 122601

4 Sector-specific grants 129987

i Sectoral grants for Health 31755

ii School Education 4800

iii Higher Education 6143

iv Implementation of agricultural reforms 45000

v Maintenance of PMGSY roads 27539

vii Statistics 1175

viii Aspirational districts and blocks 3150

4. Which among the following characteristics is/are associated with Recession

5. With reference to Business Cycle, consider the following statements

8. The higher tax buoyancy in an economy indicates

9. With reference to the Taxation system, consider the following statements

11. Which among the following is not characteristic of tax

So, Statement 3 is not correct.

The Union government defines capital expenditure as

So, option (d) is correct.

15. With reference to capital expenditure, consider the following statements

17. With reference to fiscal policy, consider the following statements

19. With reference to Programme Budgeting, Consider the following statements

20. With reference to outcome-based budgeting, consider the following statements

22. Consider the following statements:

25. With reference to Union Budget, consider the following statements

32. The largest share of India's multilateral borrowing is from

34. With reference to Fiscal deficit, consider the following statements

36. When the primary deficit is zero, it indicates

42. Consider the following statements regarding Shadani durbar.

43. Which of the following pairs are correctly matched?

50. Consider the following statements regarding Lachit Borphukan.

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