Union Budget

Question 1

Meaning of budget.

Answer 1

The budget of the government of India, for any year gives a complete picture of the Government for that year on the basis of the budget figures of the two previous years. Every budget gives three set of figures -

• Actual figures for the preceding year.
• Budget and revised estimates for the current year.
• Budget estimates for the following year.

Question 2

What is revenue / current budget?

Answer 2

It deals with the revenue receipts (i.e., from tax and non tax sources) and revenue expenditure (i.e., general services, administration, police, interest payments, agriculture, industries, health, education, etc.) met out of these.

Question 3

What is capital budget?

Answer 3

It consists of capital receipts (i.e., recoveries of market loans, net small savings, provident funds, etc.) and capital expenditure (land acquisition, loans given for economic development, defence, etc.)

Question 4

What are the types of deficit?

Answer 4

• Revenue deficit.
• Budget deficit.
• Fiscal deficit.
• Primary deficit.

Question 5

What are the effects of deficit financing?

Answer 5

• Expansion of public debt.
• Inflationary rise in prices.
• Forced savings.
• Change in pattern of investments.
• Credit creation by banks.

Question 6

What is revenue deficit?

Answer 6

Revenue deficit = revenue receipts - revenue expenditure.

Revenue deficit indicates the government’s failure to meet its current expenditure from its current revenue.

Question 7

What is budget deficit?

Answer 7

Budget deficit = total receipts - total expenditure.

Question 8

What is fiscal deficit/

Answer 8

Fiscal deficit = budget deficit + government’s market borrowings.
Fiscal deficit is budgetary deficit plus market borrowings and other liabilities of the GOI. It indicates the total borrowing requirements of the GOI from all the sources.

Question 9

What is primary deficit?

Answer 9

Primary deficit = fiscal deficit - interest payments.