Union Budget & Fiscal Deficit — Set 1

Correct Answer: B. B. Finance Minister

The Union Budget of India is presented by the Finance Minister in the Parliament. The budget outlines the government's estimated receipts and expenditure for the coming financial year. It is the most important financial document of the Government of India, presented under Article 112 of the Constitution.

Correct Answer: B. B. Article 112

Article 112 of the Indian Constitution mandates the President to cause a statement of estimated receipts and expenditure of the Government of India for every financial year to be laid before both Houses of Parliament. This statement is called the Annual Financial Statement, commonly known as the Union Budget.

Correct Answer: B. B. April 1 to March 31

India's financial year runs from April 1 to March 31 of the following year. This period is used for all government financial planning, budgeting, and accounting. The financial year was established during British rule and has been retained after independence. All government fiscal data, including revenue and expenditure, is reported for this period.

Correct Answer: C. C. 2017

Since 2017, the Union Budget has been presented on February 1, replacing the earlier tradition of presenting it on the last working day of February. This change was initiated by Finance Minister Arun Jaitley to allow earlier implementation of budgetary allocations from the start of the new financial year (April 1), rather than waiting for Parliament's approval in late March.

Correct Answer: C. C. Last working day of February

Before 2017, the Union Budget was presented on the last working day of February (usually February 28 or 29). This meant that budget approval came very late, often leaving little time for implementing new allocations before the financial year began. The shift to February 1 was intended to improve planning and implementation timelines.

Correct Answer: C. C. 2017-18

The separate Railway Budget, which had been presented independently since 1924, was merged with the Union Budget from 2017-18. This merger was recommended by the Bibek Debroy Committee to end the political interference in railway fares and bring transparency in railway finances. Railway allocations are now a part of the Union Budget.

Correct Answer: C. C. Total Expenditure minus Total Receipts (excluding borrowings)

Fiscal Deficit is the difference between the Government's Total Expenditure and its Total Receipts excluding borrowings. It represents the amount the government needs to borrow to finance its spending. A higher fiscal deficit means more borrowing, which can lead to inflationary pressure and crowding out of private investment.

Correct Answer: B. B. Revenue Expenditure minus Revenue Receipts

Revenue Deficit = Revenue Expenditure − Revenue Receipts. It represents the excess of government's revenue spending (salaries, subsidies, interest payments) over its revenue income (taxes, non-tax revenue). A revenue deficit indicates that the government is using borrowed money for current consumption rather than capital investment.

Correct Answer: B. B. Fiscal Deficit minus Interest Payments

Primary Deficit = Fiscal Deficit − Interest Payments on past borrowings. It shows the borrowing required to meet current expenditure after excluding interest burden on existing debt. A zero primary deficit means the government is borrowing only to pay interest on old debt, while a negative primary deficit indicates fiscal surpluses on the primary account.

Correct Answer: B. B. Exclude grants for capital asset creation from revenue deficit

Effective Revenue Deficit (ERD) = Revenue Deficit − Grants for creation of Capital Assets. It was introduced in Budget 2011-12 to give a more accurate picture of the revenue deficit by excluding grants that are transferred to states for creating productive capital assets. A lower ERD indicates better quality of government spending.