Q1. (UPSC 2021)

With reference to the “Union Budget,” which of the following statements is/are correct?

1. The Fiscal Responsibility and Budget Management (FRBM) Act provides for the Minister of Finance to lay before Parliament medium-term fiscal policy statements.
2. The Central Government has to present only one budget each financial year — the Revenue Budget.

Options:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

✅ Answer: (a)
Explanation: The FRBM Act requires the government to present three statements — Medium-Term Fiscal Policy, Fiscal Policy Strategy, and Macroeconomic Framework. Both Revenue and Capital Budgets are presented each year.

Q2. (UPSC 2020)

In the context of the Indian economy, which of the following is/are the components of the Capital Budget?

1. Expenditure on acquisition of assets such as roads, buildings, machinery, etc.
2. Loans received from foreign governments.
3. Loans and advances granted to the States and Union Territories.

Options:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

✅ Answer: (d)
Explanation: The Capital Budget includes both capital receipts (borrowings, loans) and capital expenditure (asset creation).

Q3. (UPSC 2019)

With reference to the Indian Government Budget, consider the following statements:

1. The Finance Bill contains the detailed estimates of revenue and expenditure.
2. The Contingency Fund of India is established under Article 267 of the Constitution.

Options:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

✅ Answer: (b)
Explanation: The Finance Bill contains proposals for taxation changes, not detailed estimates. The Contingency Fund is indeed established under Article 267.

Q4. (UPSC 2018)

Consider the following statements:

1. Fiscal Deficit is the difference between total receipts and total expenditure of the government.
2. Primary Deficit is measured as Fiscal Deficit minus Interest Payments.

Options:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

✅ Answer: (b)
Explanation: Statement 1 is incorrect because Fiscal Deficit excludes borrowings. Statement 2 correctly defines Primary Deficit.

Q5. (UPSC 2017)

Revenue Deficit arises when
(a) Revenue Expenditure is greater than Revenue Receipts
(b) Capital Expenditure is greater than Capital Receipts
(c) Revenue Receipts are greater than Revenue Expenditure
(d) Capital Receipts are greater than Capital Expenditure

✅ Answer: (a)
Explanation: A Revenue Deficit means the government’s current income is insufficient to meet current expenses.

Q6. (UPSC 2016)

In India, which of the following can be considered as public investment in infrastructure?

1. Subsidies given to food and fertilizer companies.
2. Expenditure on constructing highways and bridges.
3. Loans given to state governments for capital projects.

Options:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

✅ Answer: (b)
Explanation: Infrastructure investment relates to creation of assets like roads, bridges, or loans for such capital projects. Subsidies are revenue expenditure.

Q7. (UPSC 2015)

Which of the following are covered under Non-Tax Revenues of the Union Government?

1. Interest receipts on loans
2. Dividends and profits from PSUs
3. Receipts from disinvestment

Options:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

✅ Answer: (a)
Explanation: Disinvestment proceeds are non-debt capital receipts, not non-tax revenue.

Q8. (UPSC 2014)

Which of the following is/are considered capital receipts?

1. Market borrowings
2. Disinvestment proceeds
3. Recovery of loans
4. Tax revenue

Options:
(a) 1, 2 and 3 only
(b) 2 and 4 only
(c) 1 and 3 only
(d) 1, 2, 3 and 4

✅ Answer: (a)
Explanation: Capital receipts include borrowings, disinvestment, and loan recoveries. Tax revenue is a revenue receipt.

Q9. (UPSC 2013)

Which one of the following is likely to be the most inflationary in its effect?
(a) Repayment of public debt
(b) Borrowing from the public to finance a budget deficit
(c) Borrowing from banks to finance a budget deficit
(d) Creation of new money to finance a budget deficit

✅ Answer: (d)
Explanation: Deficit financing through money creation directly increases money supply, leading to inflation.

Q10. (UPSC 2012)

Consider the following:

1. Fiscal Deficit
2. Revenue Deficit
3. Primary Deficit

Which of the above are components of Government Budget Deficit?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

✅ Answer: (d)
Explanation: All three — Fiscal, Revenue, and Primary Deficits — are recognized indicators of budget imbalance.