Model Test Papers - Indian Polity - 1


25 Questions MCQ Test Indian Polity for UPSC (Civil Services) Prelims | Model Test Papers - Indian Polity - 1


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QUESTION: 1

Name of new revenues proposed in the budget in a year

Solution:

Resource mobilization is the process of getting resources from resource provider, using different mechanisms, to implement an organization's pre-determined goals.

It deals in acquiring the needed resources in a timely, cost-effective manner. Resource mobilization advocates having the right type of resource, at the right time, at right price with making right use of acquired resources thus ensuring optimum utilization of the same.

QUESTION: 2

Nomenclature for budget where the revenues exceed expenditure

Solution:

A government budget is said to be a surplus budget if the expected government revenues exceed the estimated government expenditure in a particular financial year. This means that the government's earnings from taxes levied are greater than the amount the government spends on public welfare.

QUESTION: 3

Budget classification of expenditure on current items like salaries, purchase of consumables, etc.

Solution:

An expenditure that neither creates assets nor reduces a liability is categorised as revenue expenditure. If it creates an asset or reduces a liability, it is categorised as capital expenditure.

Simply put, an expenditure which neither creates assets nor reduces liability is called Revenue Expenditure, e.g., salaries of employees, interest payment on past debt, subsidies, pension, etc. These are financed out of revenue receipts. Broadly, any expenditure which does not lead to any creation of assets or reduction in liability is treated as revenue expenditure.

 

QUESTION: 4

Classification of expenditure, on long-term assets like buildings, purchase of equipment, etc.

Solution:

Capital expenditures, commonly known as CapEx, are funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, an industrial plant, technology or equipment.

CapEx is often used to undertake new projects or investments by the firm. Making capital expenditures on fixed assets can include everything from repairing a roof to building, to purchasing a piece of equipment, to building a brand new factory. This type of financial outlay is also made by companies to maintain or increase the scope of their operations.

QUESTION: 5

Borrowing of the Government from the capital market like borrowing by the issue of bonds

Solution:

The Capital Budget consists of capital receipts and capital payments. The capital receipts are loans raised by the Government from the general public. The loans raised is termed as market loans or borrowings by the Government from the Reserve Bank of India and other parties through the sale of Treasury Bills.

QUESTION: 6

Brings out the link between the plan and the budget and shows clearly how each plan scheme is financed in India

Solution:

The process for linking strategy / planning to the budget is called the budget plan link.

QUESTION: 7

The Article 266 of the Constitution provides that all revenues received by a State Government shall be pooled together in

Solution:

Under Article 266 (1) of the Constitution of India, all revenues ( example tax revenue from personal income tax, corporate income tax, customs and excise duties as well as non-tax revenue such as licence fees, dividends and profits from public sector undertakings etc. ) received by the Union government as well as all loans raised by issue of treasury bills, internal and external loans and all moneys received by the Union Government in repayment of loans shall form a consolidated fund entitled the 'Consolidated Fund of India' for the Union Government.

Similarly, under Article 266 (1) of the Constitution of India, a Consolidated Fund Of State ( a separate fund for each state) has been established where all revenues ( both tax revenues such as Sales tax/VAT, stamp duty etc..and non-tax revenues such as user charges levied by State governments ) received by the State government as well as all loans raised by issue of treasury bills, internal and external loans and all moneys received by the State Government in repayment of loans shall form part of the fund.

QUESTION: 8

No money can be withdrawn from the Consolidated Fund except under appropriation; meaning

Solution:

According to Article 114 of the Indian constitution, no money can be withdrawn from the Consolidated Fund of India to meet specified expenditure except under an appropriation made by Law. Similarly, State (sub-national) Governments can also draw from their Consolidated Funds only after an appropriation act is passed. Every year, after budgetary estimates are approved, an Appropriation Bill is passed by the Parliament/state legislature and then it is presented to the President/Governor. After the assent by the President/governor to the bill, it becomes an Act. However, if during the course of the financial year, the funds so appropriated are found to be insufficient, the Constitution provides for seeking approval from the Parliament or State Legislature for supplementary grants.

Appropriation Accounts present the total amount of funds (original and supplementary) authorised by the Parliament/State legislature in the budget vis-a-vis the actual expenditure incurred against each head of expenditure. The Office of the Comptroller and Auditor General of India reports to the Union and State Legislatures any discrepancies that occur between the amounts appropriated for a particular head of expenditure and what was actually spent at the end of the financial year. These reports provide an indication of unrealistic budget estimates made by various departments. Any expenditure in excess of what was approved requires regularization by the Parliament/State Legislature.

QUESTION: 9

The Contingency Fund of India Act was enacted in the year

Solution:

The Contingency Fund of India is established under Article 267 of the Indian constitution. It is in the nature of an imprest (money maintained for a specific purpose). Accordingly, Parliament enacted the contingency fund of India Act 1950.

QUESTION: 10

Money received by the Government under the State Provident Funds are credited to the

Solution:

Public Account

The Public Account is constituted under Article 266 (2) of the Constitution. All other public moneys (other than those covered under Consolidated Fund of India) received by or on behalf of the Government of India are credited to the public account of India. The transactions under Debt, Deposits and Advances in this part are those in respect of which Government incurs a liability to repay the money received or has a claim to recover the amounts paid. The receipts under Public Account do not constitute normal receipts of Government. Parliamentary authorization for payments from the Public Account is therefore not required.

QUESTION: 11

The salary, allowances and pension payable to or in respect of the Comptroller and Auditor-General of India are charged to the

Solution:

The administrative expenses of the office of the Comptroller and Auditor-General including all salaries, allowances and pensions payable to or in respect of persons serving in that office, shall be charged upon the Consolidated Fund of India.

QUESTION: 12

 An example of an Ad-hoc Fund is

Solution:

The term “ad hoc” is a Latin phrase that literally means “to this” and commonly understood as meaning “for this purpose.” It can also be used to mean “as needed.” It is commonly used in both business and government settings. Ad hoc refers to actions taken to address a specific situation, circumstance, or problem, and not usually intended to address other or ongoing issues. It can be thought of as a “one off”.

QUESTION: 13

Expenditure from the Consolidated Fund which does not require legislative sanction

Solution:

The budget shows the estimated receipts and expenditure of the upcoming Financial Year.  After the budget is presented to the house (parliament), the government needs its approval to draw even one rupee from the Consolidated Fund of India. This approval comes by voting, which means that the Budget proposals must be passed by the Parliament. However, there are some charges which essentially have to be paid by the Government and for those charges no voting takes place. Thus, the expenditure embodied in the Budget Documents is of two types:

1 The sums required for charged expenditures. These are non-votable.

2 The sums required for other expenditures as mentioned in the Budget Documents. These are votable.

QUESTION: 14

Unforeseen Government expenditures are met from this fund

Solution:

Contingency Fund is created as an imprest account to meet some urgent or unforeseen expenditure of the government.
This fund was constituted by the government under Article 267 of the Constitution of India. This fund is at the disposal of the President.
Any expenditure incurred from this fund requires a subsequent approval from the Parliament and the amount withdrawn is returned to the fund from the Consolidated Fund.

QUESTION: 15

The proposition that no tax can be imposed or expenditure sanctioned unless initiated and asked for by the executive government implies

Solution:

The term 'the financial initiative of the executive' refers to the constitutional principle that only the government may initiate or move to increase appropriations or taxes. Like all standing orders and practices, those concerning the financial initiative regulate proceedings and impose restrictions on all members.

QUESTION: 16

The principle that no tax can be imposed except with the authority of the legislature is provided by the following article of the Constitution

Solution:

The authority to levy a tax is comes from the Constitution which allocates the power to levy various taxes between the Centre and the State. An important restriction on this power is Article 265 of the Constitution which states that “No tax shall be levied or collected except by the authority of law.” This means that no tax can be levied if it is not backed by a legislation passed by either Parliament or the State Legislature.

QUESTION: 17

The proposition that no expenditure can be incurred except with the sanction of the legislature is ensured by the following provision of the Constitution

Solution:

“No expenditure can be incurred except with the authorisation of the Legislature” is included in Article 266.

QUESTION: 18

Which State has introduced Zero-based budget first ?

Solution:

The government of India introduced the concept of Zero budget which was originated in Manipur, a state of India. In the zero-based budgeting, the expenditure of the government has to be justified for each new session.

QUESTION: 19

Article 357(1)(c) provides that during an emergency, he is empowered to authorise expenditure from the Consolidated Fund, pending the sanction of the expenditure by the Parliament. The reference is to

Solution:

357 (1)= If the Lok Sabha is not in session the President may authorise expenditure from the Consolidated Fund of State, pending sanction of such expenditure by Parliament. 

QUESTION: 20

The provision that no bill imposing tax can be introduced in the legislature except on the recommendations of the President is covered in the Constitution under the

Solution:

Article 117 in The Constitution Of India 1949

A Bill or amendment making provision for any of the matters specified in sub clauses (a) to (f) of clause ( 1 ) of article 110 shall not be introduced or moved except on the recommendation of the President and a Bill making such provision shall not be introduced in the Council of States: Provided that no recommendation shall be required under this clause for the moving of an amendment making provision for the reduction or abolition of any tax.

QUESTION: 21

The provision that no demands for grant of any money for expenditure can be made except on the recommendations of the President is covered under the

Solution:

Article 113  prescribes that no demand for grants can be presented in the Lok Sabha without the President of India’s prior approval.

QUESTION: 22

The estimates of expenditure for any financial year have to be presented to the legislature and sanction of the expenditure is given on that basis. This is according to–

Solution:

Articles 112 (and 202 in case of a State) of the Constitution provides that President (Governor in case of a State) shall in respect of every financial year cause to be laid before both the houses of Parliament (or Legislature in case of a state) a statement of the estimated receipts and expenditure of the Government of India (or of the State). This is called as the 'Annual Financial Statement' in the Constitution.

QUESTION: 23

Article 266(1) of the Constitution provides for the creation and maintenance of

Solution:

This fund was constituted under Article 266 (1) of the Constitution of India. All revenues received by the government by way of direct taxes and indirect taxes, money borrowed and receipts from loans given by the government flow into the Consolidated Fund of India.

QUESTION: 24

Beginning of the financial year of the US government

Solution:

The fiscal year is the accounting period for the federal government which begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2013 begins on October 1, 2012 and ends on September 30, 2013.

QUESTION: 25

If the Appropriation Bill is not passed by the expiry date of the financial year, what is done in order to regularise the expenditure is to vote in lump a portion of the estimates so that the administration can be carried on.The procedure is known as

Solution:

The Appropriation Bill and Finance Bill are presented in the month of February, and they take their own time to become act. In order to keep the Government functioning, the House is asked to vote usually two months’ funds i.e. approximately 1/6th of the total estimated expenditure under various grants. This is called Vote on Account. Vote on Account is passed after general discussion on the Budget. Usually it is treated as a formal matter and is passed without discussion. 

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