Union Budget & Fiscal Deficit — Set 9

Correct Answer: B. B. Gross borrowings include repayments of old debt while net borrowings = gross minus repayments

Gross Borrowings = total new borrowings raised during the year (new G-Secs, T-Bills issued). Net Borrowings = Gross Borrowings minus repayment of maturing old debt. The fiscal deficit is financed by net borrowings. As a large stock of government debt matures each year, gross borrowings are significantly higher than net borrowings. Both numbers are important for debt market liquidity.

Correct Answer: B. B. Government's investment in infrastructure and productive assets

The Capital Expenditure (capex) Budget emphasises the government's investment in infrastructure and productive assets — roads, railways, ports, power, digital infrastructure, healthcare, and education facilities. Since 2020-21, the Indian government has significantly scaled up capital expenditure as a growth driver. Capital expenditure multiplier effects (₹1 of capex generates more than ₹1 of GDP) make it superior to revenue spending for growth.

Correct Answer: C. C. Public Account of India

The National Small Savings Fund (NSSF) is part of the Public Account of India. It pools collections from small savings schemes (PPF, NSC, Post Office deposits, Kisan Vikas Patra, Sukanya Samriddhi etc.). The government uses NSSF balances to finance part of its fiscal deficit. NSSF investment in Central and State government securities makes it a captive source of government financing.

Correct Answer: A. A. Before devolution to states and net of tax refunds

Gross Tax Revenue (GTR) is the total tax collected by the Central Government before: (1) devolving states' share (41% of divisible pool) and (2) making refunds. Net Tax Revenue to Centre = GTR minus devolution minus refunds. The distinction matters because GTR is the starting point for calculating both states' entitlements and the Centre's own fiscal position.

Correct Answer: B. B. Revenue Expenditure (Major Subsidies)

Subsidies (food, fertiliser, petroleum/fuel subsidies) are classified under Revenue Expenditure as 'Major Subsidies' in the Union Budget. They are significant items in India's budget and contribute to revenue deficit and fiscal deficit. Over the years, the government has undertaken subsidy reforms including direct benefit transfers for LPG (PAHAL scheme) and food subsidy rationalisation.

Correct Answer: B. B. 5 years from July 2017

The GST Compensation to states for revenue loss due to GST implementation was guaranteed for 5 years from July 1, 2017 (i.e., up to June 2022). The compensation was financed by the GST Compensation Cess levied on luxury and sin goods. After June 2022, states no longer receive guaranteed GST compensation, though the cess continues to be levied to repay loans taken during COVID to fund compensation shortfalls.

Correct Answer: B. B. Additional funds are needed beyond original budget allocation during the year

Supplementary Demand for Grants is presented to Parliament during the year when additional expenditure beyond the original budget allocation is required. It is presented in two batches (in March and October-November each year). Parliament must approve supplementary demands before the additional spending can be authorised from the Consolidated Fund through a Supplementary Appropriation Act.

Correct Answer: B. B. Expenditure charged to Consolidated Fund not requiring annual Parliamentary vote

Charged Expenditure includes items charged directly to the Consolidated Fund of India that are NOT submitted to Parliament for vote — they are non-votable. These include the President's salary, Speaker's salary, salaries of Supreme Court and High Court judges, interest and debt service payments, and CAG's salary. This protects these expenditures from political interference. Article 112(3) lists charged expenditures.

Correct Answer: B. B. Government is completing its term and elections are due, so only a vote-on-account and minibudget is presented

An Interim Budget is presented by a government that is in its last year before general elections and will not be in office for the full next financial year. It typically contains a Vote on Account (for 2-4 months of spending) plus tax proposals. The interim budget for 2024-25 was presented in February 2024 before the Lok Sabha elections, with the full budget following in July 2024.

Correct Answer: A. A. First paperless Budget presented via tablet

The Union Budget 2021-22 presented by Finance Minister Nirmala Sitharaman on February 1, 2021 was the first paperless budget in India's history. Due to COVID-19, the traditional printed budget documents were not distributed; instead, MPs accessed the budget through a digital app (Union Budget Mobile App). It was also the first budget presented using a tablet (a 'Made in India' device).