GOVT BUDGET

Question 1

What is a budget?

Answer 1

Budget is an estimate of income and expenditure for a future period of time. Talks about how money is to be raised and spent in the coming year.

Question 2

Why is the budget important?

Answer 2

Planned economic organisation.
Democratic transparency and accountability.
Reflected in the Indian constitution- Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law. And as per Article 266 no expenditure can be incurred except with the authorization of the legislature. Government takes the approval of the parliament for the taxes/receipts through the Finance Bill (Article 110) and the approval for the expenditures through the Appropriation Bill (Article 114).

Question 3

Budget in India. who prepares? Division, dept, ministry? which article? periodincluded

Answer 3

Budget is prepared by the Budget Division, Department of Economic Affairs, Ministry of Finance. The Article 112 specifies that the President shall, in respect of every financial year, cause to be laid before both the houses of the parliament, the Annual Financial Statement (Budget) of estimated receipts and expenditures of the government in respect of every financial year from 1st April to 31st March.

Question 4

how many sets of figures included in Indian budget?

Answer 4

Every budget gives three sets of figures. For example, the budget (Annual Financial Statement) presented in Feb 2023 for the year 2023- 24 will contain the following figures:
Budget Estimate (BE) for the next FY 2023-24
Budget and Revised Estimate (RE) for the current FY 2022-23
Actual figures for the preceding FY 2021-22

Question 5

Types of budgets based on time period

Answer 5

1.Full Budget: It contains the government’s estimate for expenditure and receipts for the entire financial year.
2. Interim Budget: During an election year, the ruling government may present an interim budget which is a complete set of accounts, including both expenditure and receipts but only for a part of the year. An Interim Budget gives the complete financial statement, very similar to a full Budget. When the new government will be formed, it shall prepare the full budget. There is no such constitutional obligation to prepare an interim budget, it is just an unwritten convention that political parties have developed.
3. Vote-on-Account: If the budget has not been passed and the government needs money to carry on its normal activities, then to overcome such difficulty, the Constitution has authorized the Lok Sabha to make any grant in advance in respect to the estimated expenditure for a part of the financial year, pending the completion of the voting of the demand for grants and the enactment of the Appropriation bill.
‘Vote on Account’ deals only with the expenditure side of the government’s budget.
(This advance is provided while the detailed demands for grants (which are specific requests for funds by different ministries) are being debated and voted upon in the Lok Sabha. It is also pending the passing of the Appropriation Bill, which legally authorizes the government to withdraw money from the Consolidated Fund of India.)

Question 6

Types of budgets based on theme

Answer 6

Zero-based Budget
Zero-based budgeting is different from the incremental (conventional) budgeting system in the sense that the former begins with a zero base, i.e., from scratch and are not based on previous trends/data. For example, if we are preparing the budget for any particular department or Ministry then all the expenses are calculated fresh rather than taking the previous year expenditure and just incrementing it by some percentage.
o It ensures that the activities carried out are relevant for the accomplishment of objectives
o Excessive and unnecessary expenditure on various activities is identified and eliminated

Outcome budget
Unlike traditional budgets, which focus on inputs (amount of money allocated) and outputs (immediate results or products of spending), the Outcome Budget emphasizes outcomes (the ultimate impact or changes brought about by the spending). For example, in an education program, while the output might be the number of schools built, the outcome would be the improvement in literacy rates.
Objectives and Targets: Clearly defined objectives and targets that the program or scheme aims to achieve.
Indicators: Specific indicators to measure the performance
Baseline Data which serves as a reference point.
Timelines in which the objectives are expected to be met.
Responsible Agencies

Gender Budget

Gender Budgeting includes gender sensitive formulation of legislation, policies, plans, programs, schemes, resource allocation, implementation, monitoring, audit and impact assessment of programs and schemes.
Gender gaps persist in education, employment, entrepreneurship and public life opportunities and outcomes. Gender budgeting is a way for governments to promote equality through the budget process. Gender budget ensures that gender commitments are translated into budgetary commitments.

Question 7

Gender budget in India

Answer 7

Gender Budget Statement was first introduced in the Indian Budget in 2005-06. Government publishes a Gender Budget Statement annually along with the Union Budget.
Part A includes schemes with 100% allocation for women (for ex: Beti Bachao Beti Padhao, Ujjawala, Mahila Shakti Kendra, Anganwadi etc.)
Part B with schemes allocating at least 30% of funds for women (for ex: Mid-day meals programme, PM POSHAN etc.)

Question 8

What are the budget documents presented to the parliament

Answer 8

The budget documents presented to the Parliament comprise of the following :
o Budget Speech
o Annual Financial Statement
o Demands for Grants
o Appropriation Bill
o Finance Bill
o Statements mandated under the FRBM Act:
✓ Macro-Economic Framework Statement
✓ Fiscal Policy Strategy Statement
✓ Medium Term Fiscal Policy Statement
o Expenditure Budget
o Receipts Budget
o Expenditure Profile
o Memorandum Explaining the Provisions in the Finance Bill (xi) Budget at a Glance
o Outcome Budget
BADAF MMF REEMBO

Question 9

Is the economic survey a part of the budget docs?

Answer 9

Earlier, the Economic Survey also used to be presented to the Parliament along with the budget. Now, it is presented one day or a few days before the presentation of the budget. This report is prepared by the finance ministry and indicates the status of the national economy.

Question 10

Procedure of the budget

Answer 10

1.The budget is presented in the parliament on the first working day of February at 11.00 am. The General Budget is presented in Lok Sabha by the finance minister and he/she makes a speech introducing the budget and after the speech it is presented in the Rajya Sabha. That’s it.

2.FIRST READING General discussion on the budget happens in both the houses of the parliament. After the general discussion is over, the houses are adjourned for a fixed number of days.

3.DRSCs make detailed reports and present to houses within stipulated time. In Lok Sabha, one by one demand for grants are discussed and voted on. SECOND READING-The time for discussion and voting of Demands for Grants is allocated by the speaker in consultation with the leader of the house. On the last day of the allocated days, the speaker puts all the outstanding demands to the vote of the house. This device is popularly known as “Guillotine”. In RS, only a general discussion, no vote.

4.THIRD READING-Appropriation Bill article 114 approves expenditure of govt. Finance bill article 110 approves taxation proposals. Goes to RS which can only give recommendations which may/may not be accepted by the LS and is thus passed.

Question 11

Provisional Collection of Taxes Act, 1931

Answer 11

This act provides a legal framework that allows the government to enforce certain tax provisions immediately upon the introduction of the Finance Bill. This is done to avoid disruptions in revenue collection and to ensure that there is no loss of revenue during the period the bill is being debated and passed. But Finance bill must be passed within 75 days for these to be valid.

Question 12

For UTs without legislatures, budget

Answer 12

Discussed by the LS, taken from the Consolidated fund of India.

Question 13

Expenditure charged upon Consolidated fund of India

Answer 13

Expenditure which is charged upon the Consolidated Fund of India shall not be submitted to the Vote of the Parliament, but discussion can happen in either House of the Parliament on any of those estimates.

Question 14

Changing of taxes

Answer 14

1.During the Budget, to change direct taxes, amendment in the particular Act is required through the Finance Act. 2.But in case of indirect taxes like “Central Excise”, “Customs Duty”, a ceiling rate is specified in the particular Act and if the Excise and Customs duty are within that ceiling rate then amendment in the particular Act is not required but if the duty has to be increased beyond the Ceiling rate, then amendment in that particular Act is required through the Finance Act. 3.For amending GST rates, GST Council takes a decision and a gazette notification is issued.

Question 15

Supplementary Demand for Grants

Answer 15

If the amount authorised to be expended for a particular service for the current financial year is found to be insufficient for the purpose of that year or when a need has arisen during the current financial year for supplementary or additional expenditure upon some ‘new service’ not contemplated in the budget for that year then the President causes to be laid before both the Houses of Parliament another statement showing the estimated amount of that expenditure which is called “Supplementary Demand for Grants”.

Question 16

Demand for Excess Grants

Answer 16

If any money has been spent on any service during a financial year in excess of the amount granted for the service for that year, the President causes to be presented to Lok Sabha a demand for such excess (which is called “Demand for Excess Grants”). All cases involving such excesses are brought to the notice of Parliament by the CAG through a report on the Appropriation Accounts. The excesses are then examined by the Public Accounts Committee which makes recommendations regarding their regularisation in its report to the House.

Question 17

Supplementary and excess grants when

Answer 17

The “Supplementary Demands for Grants” are presented to and passed by the House before the end of the financial year while the “Demands for Excess Grants” are made after the expenditure has actually been incurred and after the financial year to which it relates has expired.

Question 18

Consolidated Fund of India (CFI):

Answer 18

All revenues received by the government by way of taxes whether direct or indirect and other receipts flowing to the government in connection with the conduct of government business like receipts from Railways, Post, transport, government PSUs etc. are credited into the CFI. Similarly, all loans raised by the government by issue of public notifications, treasury bills and loans obtained from foreign governments and international institutions are credited into this fund. All expenditures incurred by the government for the conduct of its business including repayment of internal and external debt and release of loans to States/ Union Territory governments for various purposes are debited against this fund and no amount can be withdrawn from the Fund without the authorization from the Parliament.

Question 19

Contingency Fund of India

Answer 19

For emergencies, under President’s i.e. executive custody. Can be immediately withdrawn. But for replenishment and accountability, bill placed in the parliament for approval. Current 30k, can be increased.

Question 20

Public Account of India

Answer 20

All the public money received by the government other than those which are credited to the Consolidated Fund of India are accounted for Public Account. The receipts into the Public Account and disbursements out of it are not subject to vote by the Parliament. Receipts under this account mainly flow from the sale of Savings Certificates, contributions into the General Provident Fund, Public Provident Fund, Security Deposits and Earnest Money Deposits (a kind of security deposits) received by the government. In respect of such deposits, the government is acting as a Banker or Trustee and refunds the money after the completion of the contract/ event.

Question 21

exact components of revenue expenditure

Answer 21

Wages and Salaries: Payments to employees for their services.

Pensions and Retirement Benefits: Payments to retired employees.

Interest Payments: Payments on government debt.

Subsidies: Financial support to individuals, businesses, or sectors.

Maintenance and Repairs: Costs for upkeep of infrastructure and equipment.

Utility Expenses: Payments for essential services like electricity and water.

Administrative Expenses: Costs for general government operations.

Grants: Transfers of money for specific purposes.

Rent: Payments for use of buildings or land.

Public Safety and Security: Expenditures for law enforcement and safety services.

Question 22

exact components of capital expenditure

Answer 22

Loan Disbursals by the Government
* Loan Repayments by the Government. (Hence statement 4 is incorrect)
* Plan Expenditure of the Government.
* Capital Expenditures on Defence by the Government.

Question 23

interest rates during expansion and contraction

Answer 23

Expansion: Lower interest rates to stimulate economic activity, encourage borrowing, and support growth.
Contraction: Higher or stable interest rates to control inflation, stabilize financial markets, and manage economic slowdowns.

Question 24

where did economic planning first emerge?

Answer 24

USSR

Question 25

Which are known as
the ‘Twin Deficits’?

Answer 25

Fiscal Deficit and Current Account
Deficit.

Interconnection: The ‘Twin Deficits’ are often seen together because they can reinforce each other. For example:

Fiscal Deficit: High government borrowing to finance the fiscal deficit can lead to higher interest rates and increased demand for imports (if not managed well).
Current Account Deficit: If a country imports more than it exports, it needs to finance the difference by borrowing from foreign sources, which can increase the fiscal deficit.

Question 26

can a highly unequal society lead to more Fiscal deficit?

Answer 26

Highly unequal societies face fiscal challenges as the wealthy utilize legal tax avoidance schemes, while low-income earners may not
contribute much in taxes, increasing pressure on welfare spending.

Question 27

What about states and UTs wrt govt accounts?

Answer 27

State Governments has their own Consolidated Fund, Public Account and Contingency Fund (as mandated by the Constitution).
Union Territory (with Legislative Assembly) has their own Consolidated Fund, Contingency Fund and Public Account as per “The Government of Union Territories Act, 1963”. The Contingency Fund of Union Territories lies with their “Administrators” or “Lieutenant Governors”.

Question 28

Budget Classification acc to Constitution

Answer 28

The Constitution specifies that the budget must distinguish the expenditures on revenue account from other expenditures (capital account). Therefore, the budget comprises the Revenue Budget and Capital Budget.

Question 29

Revenue and capital Budget constituents

Answer 29

Revenue Receipts and Revenue expenditure, Capital receipts, capital expenditure

Question 30

revenue receipts

Answer 30

Those receipts of the government which neither creates a liability for the government nor reduces the assets (physical or financial) of the government are called revenue receipts. Revenue receipts are non-redeemable i.e., they cannot be reclaimed from the government. Revenue receipts can be of two types.
1.Tax Revenues consists of direct and indirect taxes of the central government.
2.Non-Tax Revenue consists of interest receipts on account of loans given by central government, dividend and profits on investments made by the central government (i.e., PSUs), fees and fines and other receipts for services rendered by the government like passport fees etc. Cash rants-in-aid from foreign countries and international
organisations are also part of the non-tax revenue.

Question 31

Revenue Expenditure

Answer 31

Those expenses of the government which neither creates any asset (physical or financial) nor reduces any liabilities are called revenue expenditure. Revenue expenses relate to the expenses incurred for the normal functioning of the government departments and various services, interest payments on debt incurred by the central government and grants given to the state government and local bodies.

Question 32

Capital Receipts:

Answer 32

Those receipts of the government which either creates liability or reduces the assets (physical or financial) are called capital receipts. The main items of capital receipts are loans raised by the government and recovery of loans previously granted by the central government. It also includes small savings schemes (Post office savings accounts, National Savings Certificates etc.), Provident Funds and net receipts obtained from the sale of shares in PSUs (disinvestment).

Question 33

Capital Expenditure

Answer 33

Those expenses of the government which either creates assets (physical or financial) or reduces liabilities are called capital expenditures. Capital expenditures include acquisition of land, building, machinery, equipment, purchase of shares by the government and loans and advances by the central government to state and union territory governments, PSUs and other parties, repayment of loans etc.

Question 34

Government Deficits

Answer 34

1.Revenue deficit- Revenue Deficit = Revenue Expenditure - Revenue Receipts. Since a major part of the revenue expenditure (salary, pension, interest payments, subsidies etc.) is committed expenditure, it cannot be reduced. When the Govt. is faced with a revenue deficit, it generally reduces the productive capital expenditure and welfare expenditure to cover up the excess revenue expenses.
2.Fiscal Deficit: It is the difference between the government’s total expenditure (Revenue and Capital) and its total receipts (Revenue and Capital) EXCEPT BORROWINGS. Fiscal deficit indicates the total borrowing of the government from all sources i.e. domestic borrowing plus borrowing from external sources
3.Primary Deficit-A large part of the government’s fiscal deficit is because it needs to pay interest on its previous accumulated debt. If we want to measure the government’s deficit excluding the interest payment on the previous debt then it is called the primary deficit. The goal of measuring the primary deficit is to focus on present fiscal imbalances.
Primary Deficit = Fiscal Deficit - Net interest liabilities
So, primary deficit tells about the deficit in the government’s budget excluding the interest liabilities on the government’s accumulated debt.

Question 35

Effective Revenue Deficit and Effective Capital Expenditure

Answer 35

= Revenue Deficit - Grants given to states for creation of capital assets
= Capital Expenditure + Grants given to states for creation of capital assets.

Question 36

Deficit financing

Answer 36

is the budgetary situation where government expenditure is higher than its revenue. It is a practice adopted for financing the excess expenditure with OUTSIDE resources by either printing of additional currency or through borrowing.

Question 37

Fiscal Policy

Answer 37

Fiscal policy is the means by which government adjusts its spending levels and tax rates to monitor and influence a nation’s economy. It is a sister strategy to monetary policy.
The main objectives of government’s fiscal policy are:
Economic Growth (Stabilisation of business cycles)
Maintain high level of employment
Control inflation
Equitable distribution of wealth
Welfare (subsidies, income support, health, education etc.)
The above are not priority wise and depending on the situation of the economy, Govt. keeps
on changing its focus among thes

Question 38

Expansionary and Contractionary fiscal policy

Answer 38

Pumping money into the economy by decreasing tax level and increasing government spending is also known as pump priming. With more money in the economy and fewer taxes to pay, consumer demand for goods and services increases. This in turn rekindles businesses and turns the cycle around from stagnant to active.
In case of contractionary fiscal policy, Govt. reduces spending and increases tax levels to suck the money out of the economy and hence reduces the aggregate demand to tackle inflation.

Question 39

Counter and pro cyclical fiscal policy

Answer 39

A counter-cyclical fiscal policy refers to strategy by the government to counter boom or recession through fiscal measures. It works against the ongoing boom or recession trend; thus, trying to stabilize the economy. Pro-cyclical is the opposite of countercyclical. Here, fiscal policy goes in line with the current mood of the business cycle i.e., amplifying them. For example, during the time of boom, government makes high expenditure and doesn’t hike taxes. Thus, boom grows further. Such a policy is dangerous and brings instability in the economy

Question 40

Fiscal Consolidation policy

Answer 40

It is an effort by the Government to bring down fiscal deficit. It is an effort to reduce public debt, raise revenues and bring down wasteful expenses.

Question 41

Fiscal Responsibility and Budget Management (FRBM) Act 2003 main objectives and how will they be achieved

Answer 41

Based on recommendations of EAS Sharma committee for fiscal prudence after a dangerous 6% fiscal deficit in 2000.
The main objectives of the FRBM Act 2003 were:
To ensure inter-generational equity (equality)
Long term macroeconomic stability
The above two objectives were to be achieved broadly by
-Achieving sufficient revenue surplus
-Removing fiscal obstacles to monetary policy
-Effective debt management by limiting deficits and borrowing

Question 42

Fiscal Deficit and Debt Targets of FRBM

Answer 42

1.Limit fiscal deficit to 3% of GDP by 31st March 2021.
2.Ensure general government debt does not exceed 60% of GDP and central government debt does not exceed 40% of GDP by 2024-25.
3.Restrict additional loan guarantees to 0.5% of GDP per financial year.
Annual Reduction Targets:
1.Allow exceeding targets only for national security, war, national calamity, agricultural collapse, structural reforms, or significant economic downturns (escape clause) but must not exceed 0.5% of GDP annually.
2.Set annual targets to reduce the fiscal deficit if it exceeds limits.

Question 43

Reduction in Fiscal Deficit During Economic Growth acc to FRBM

Answer 43

1.Reduce fiscal deficit by at least 0.25% of GDP if quarterly growth exceeds the average of the previous four quarters by 3%.

Question 44

Borrowing Restrictions acc to FRBM

Answer 44

Central government shall not borrow from the RBI except for temporary cash needs.
RBI may buy central government securities in the secondary market and subscribe to primary issues under escape clause conditions.

Question 45

Fiscal Transparency Measures acc to FRBM

Answer 45

Finance Minister to review budget trends semi-annually and report to Parliament.
No deviations from obligations without Parliamentary approval.
CAG to periodically review compliance and report to Parliament.

Question 46

Fiscal Policy Statements acc to FRBM

Answer 46

Annually lay before Parliament: Medium Term Fiscal Policy Statement, Fiscal Policy Strategy Statement, Macroeconomic Framework Statement, and Medium-Term Expenditure Framework Statement (in session following budget presentation).

Question 47

State Fiscal deficit limits

Answer 47

Like Centre, every state has also fixed Fiscal deficit limit of 3% in their laws.

Question 48

Deficit financing leading to inflation

Answer 48

Deficit financing increases the money supply by government borrowing from the central bank.
Higher government spending stimulates demand for goods and services, pushing prices upwards. Government borrowing reduces available funds for private investment.
Increased demand for labor due to government projects raises wages and production costs.
Deficits can lead to currency devaluation, making imports more expensive and contributing to inflation.
Anticipation of inflation prompts businesses to raise prices preemptively.

Question 49

Crowding in and crowding out of pvt investment during deficit financing when

Answer 49

Crowding In: Occurs when government spending stimulates economic activity and investor confidence, leading to increased private investment. This happens when deficit spending is used for productive investments that enhance economic growth and profitability. When resources are not fully utilised previously.

Crowding Out: Happens when increased government borrowing reduces the pool of funds available for private investment. This occurs if deficits lead to higher interest rates or less available credit, discouraging private sector borrowing and investment. Resources already utlized.

Question 50

Do economies really need a fiscal deficit?

Answer 50

Many economists including Lord Keynes had advocated the need for small fiscal deficits to boost the economy especially in times of crisis.
Depends upon interest rate being lower than growth rate.
But can lead to huge accumulation of debt.

Question 51

Pragmatic fiscal policy

Answer 51

In general, fiscal policy must be counter-cyclical to smooth out economic cycles instead of exacerbating them. While counter-cyclical fiscal policy is necessary to smooth out economic cycles, it becomes critical during an economic crisis.
Pro cyclical more volatile
Most of the studies concur that fiscal policies are considerably more effective in recessions than in expansions.

Question 52

As per article 293 of the Constitution, States need to take prior approval from the Centre for borrowing when?

Answer 52

States have taken debt from Centre and there are pending dues; or
There is any outstanding loan on States with respect to which Central Govt. has given
guarantee.
But as almost every state has taken loan from the Centre and there are pending dues so they take permission from Centre before borrowing. If States are breaching their FRBM limits then they do not require Centre permission.

Question 53

Debt for centre and states, how?

Answer 53

Article 292 of the Constitution states that the government of India can borrow amounts specified by the Parliament from time to time. Article 293 of the Constitution mandates that the state governments in India can borrow only from internal sources. As per the recommendations of the 12th Finance Commission, access to external financing by the various states is facilitated by the Central Government which provides the Sovereign guarantee for these borrowings.
Govt. of India (Central Govt.) Total Debt/Liabilities = 1 + 2 + 3 + 4
1. Internal Debt[it is basically what Govt. of India borrows by issuing Debt Securities like Treasury Bills and Dated Securities in the domestic market. It is also called Domestic Market Borrowings]
2. External Debt [It is basically borrowing from other Governments (bilateral debt) and Multilateral Agencies like World Bank, ADB etc. and FPI purchasing G-Secs]
3. Public Account Liability [It includes National Small Savings Schemes like Public Provident Fund, Kisan Vikas Patra etc.]
4. Off budget liabilities [Such financial liabilities of any corporate or other entity owned/controlled by the Central Government, which the Govt. has to repay or service from the Annual Financial Statement.]
Internal Debt and external debt combined together is also called Public Debt (of Govt. of India) and it is contracted (on the security of) against the Consolidated Fund of India.

Question 54

External Debt of India

Answer 54

External Debt of India refers to the debt owed to non-residents by the residents of the country (i.e., government and the private sector).

Question 55

Sovereign debt

Answer 55

Sovereign Debt is also called Govt. of India (external) Debt. (State Govt. external debt is in the name of GoI only)
It includes
1.FPI/FII investments in G-securities
2.Loans under Bilateral Assistance/Loans under Multilateral Assistance

Question 56

Non-Sovereign Debt

Answer 56

It includes
1.Commercial Borrowing- External Commercial Borrowing ECB plus FII investments in Indian corporate bonds
2.NRI Deposits

Question 57

India’s actual debt situation- largest external debt from? In terms of currency?

Answer 57

Commercial borrowings remained the largest component of external debt followed by
non-resident deposits.
Currency wise, India’s external debt includes:
o US Dollar denominated (55.5%)
o Indian Rupee denominated (30%) o And then some is SDR, Yen, Euro.
But all the external debt is EXPRESSED in US currency

Question 58

How has India historically monetized its deficit?

Answer 58

Before 1997, the Indian government financed its deficit directly from the RBI by issuing ad hoc Treasury Bills. This practice, called direct monetization of the deficit, was stopped in 1997 through an agreement between the Government of India and RBI.

Instead, the ‘Ways and Means Advances’ (WMA) scheme was introduced to help the government manage temporary mismatches in its receipts and payments. Direct monetization of the deficit has been prohibited since 1997, except in exceptional circumstances as allowed by the Fiscal Responsibility and Budget Management (FRBM) Act of 2003.

And, it was also agreed that henceforth, the RBI would operate only in the secondary market through the Open Market Operation (OMO) route.

Question 59

When govt. should go for direct monetisation? And why?

Answer 59

When the banks do not have sufficient liquidity i.e., there is shortage of liquidity in the economy then if govt will try to borrow from banks then it will further deteriorate the liquidity situation and will result in increase in interest rate which will hamper the investments (for which govt is trying hard presently) in the economy and recovery may be slow. So, in this situation, govt can go for direct monetisation. BUT if banks are flush with liquidity, then first govt should try to borrow from banks.

Question 60

Pros and cons of deficit MONETIZATION

Answer 60

Can help increase demand in economy/investement and take out from slump, but
Can lead to inflation due to increased money supply
Can cause RBI to lose control of its monetary policy
Creates debt burden for future

Question 61

Fiscal Council, hows the idea?

Answer 61

XIV Finance Commission had recommended for establishment of an independent fiscal council.
Pros- 1.transparency accountability in both spending and taxation 2. No more manipulated figures 3. Can help in stability and RBI monetary policy
Cons- already many organzations/mechanisms- CAG, FRBM obligations, (NSO, RBI)growth forecasts etc.

Question 62

has ZBB been adopted in India?

Answer 62

Zero-Based Budgeting has been experimented with in various forms and at different times in India, but it was not formally adopted nationwide in 1991.

Question 63

non debt capital receipts

Answer 63

those which only decrease assets and dont increase liabilities

Question 64

provident funds what sort of receipts? and why?

Answer 64

Provident funds are considered capital receipts because they are long-term savings that the government or organization needs to pay back in the future. When employees contribute to these funds, the organization owes this money to them later, along with any interest earned. This debt or obligation to pay back makes it a capital receipt.