Test: Union Budget - CUET Commerce MCQ

Nirmala Sitharaman presented the Union Budget for the first time in 2019. Since then, she has presented the Union Budget annually until 2023. Therefore, by 2024, she would have presented the Union Budget for the sixth time.

• Step 1: Calculate the percentage increase in Defence Outlay


• Step 2: Identify the Defence Outlay in the previous year and the Defence Outlay in Budget 2024


• Step 3: Use the formula: Percentage Increase = ((New Value - Old Value) / Old Value) * 100


• Step 4: Substitute the values into the formula and calculate the percentage increase


• Step 5: Compare the calculated percentage increase with the given options to find the correct answer

Based on the calculations, the percentage increase in Defence Outlay as announced in Budget 2024 is 11.1%. Therefore, the correct answer is option C: 11.1%.

Revised Estimate of Fiscal Deficit in Budget 2024

• Original Estimate: The original estimate of the fiscal deficit as a percentage of GDP in Budget 2024 was 5.8%.


• Revised Estimate: The revised estimate of the fiscal deficit as a percentage of GDP in Budget 2024 is 6.5%.


• Reason for Revision: The fiscal deficit was revised upwards due to increased government spending and lower than expected revenue collections.


• Impact: A higher fiscal deficit can lead to concerns about the government's ability to meet its financial obligations and may put pressure on inflation and interest rates.


• Policy Implications: The government may need to implement measures to control spending, boost revenue generation, and manage the fiscal deficit to ensure economic stability.

• Original Estimate: The previous estimate of the fiscal deficit in Budget 2024 was X%.


• Revised Estimate: The revised fiscal deficit in Budget 2024 is Y%, which is different from the original estimate.

• Decreased by 1.3%: The revised fiscal deficit in Budget 2024 has decreased by 1.3% compared to the previous estimate.


• Increased by 0.5%: The revised fiscal deficit in Budget 2024 has increased by 0.5% compared to the previous estimate.


• Remained Unchanged: The revised fiscal deficit in Budget 2024 has remained unchanged from the previous estimate.


• Increased by 1.8%: The revised fiscal deficit in Budget 2024 has increased by 1.8% compared to the previous estimate.

• Limited Availability: One of the main challenges mentioned in the statement is the limited availability of CBG. This can be attributed to the low production of CBG facilities and the insufficient infrastructure for its distribution.


• Transport Challenges: Another key challenge is the transport challenges associated with CBG. The lack of a well-established transport network for CBG can hinder its distribution to blending facilities.

These challenges pose significant obstacles to the successful implementation of the CBG blending mandate, as they impact the overall supply chain and availability of CBG for blending with conventional fuels.

• Insufficient capex: The 11.1% higher capex budgeted for infrastructure may not be enough to meet the growing demands of infrastructure development. This gap in funding could lead to a need for private sector involvement to bridge the financial shortfall.


• Lack of government funds: The statement suggests that the government lacks the funds to fully support infrastructure projects. In such a scenario, the private sector may need to contribute financially to ensure the continued progress of infrastructure development.


• Traditionally funded by the private sector: Infrastructure projects are often funded by the private sector. Given the higher capex budget and the need for sustained growth momentum, it is likely that the private sector will play a significant role in financing and executing these projects.

Overall, due to the challenges posed by insufficient capex, lack of government funds, and the traditional role of the private sector in funding infrastructure projects, it is suggested that the private sector will need to step in to maintain growth momentum in the context of the 11.1% higher capex budgeted for infrastructure.

• Addressing a Key Factor Limiting Milch Animal Productivity: Foot and mouth diseases can significantly impact the health and productivity of milch animals. By investing in preventing these diseases, it helps address a key factor that limits milch animal productivity.


• Reducing the Number of Milch Animals: By preventing foot and mouth diseases, the number of milch animals affected by these diseases decreases, leading to a healthier population of milch animals overall.


• Enhancing the Quality of Feed for Milch Animals: Investments in preventing diseases can also lead to improved animal health, which in turn can result in better absorption of nutrients from feed, ultimately contributing to higher milch animal yield.

• House of the Parliament: Lok Sabha

• The Union Budget, also known as the Annual Financial Statement, is presented in the Lok Sabha by the Finance Minister of India.


• It is one of the most important events in the parliamentary calendar and outlines the government's revenue and expenditure for the upcoming financial year.


• The Finance Minister presents the budget, which includes details of taxes, allocations for various sectors, and overall economic policies.


• After the budget is presented in the Lok Sabha, it is then debated and discussed by Members of Parliament before it is approved.


• Once approved by the Lok Sabha, the budget is then sent to the Rajya Sabha for further discussion and approval.


• Ultimately, the Union Budget needs to be passed by both houses of Parliament before it becomes law.

• Period covered in the Union Budget: April to March

• The Union Budget in India covers the fiscal year, which runs from April 1st to March 31st of the following year.


• During this period, the government presents its budget for the upcoming financial year, outlining its revenue and expenditure plans.


• This budget includes allocations for various sectors, taxes, subsidies, and other financial aspects of the government's functioning.


• It is an important document that sets the financial direction for the government and impacts various stakeholders in the economy.


• Overall, the Union Budget for India covers the period from April to March each year.

Annual Financial Statement

• Definition: The Annual Financial Statement is a document that outlines the estimated receipts and expenditures of the government for a particular fiscal year.


• Importance: It provides a comprehensive overview of the government's financial plans and priorities for the upcoming year.


• Contents: The statement includes details of revenue sources, planned expenditures, deficit projections, and other financial information.


• Presentation: The Annual Financial Statement is usually presented by the Finance Minister during the budget session in the parliament.


• Approval: Once presented, the statement needs to be approved by the parliament before it can be implemented.

• Union Budget of India: The Union Budget of India is an annual financial statement presented by the Government of India in Parliament, detailing the revenue and expenditure of the upcoming fiscal year.


• Also Known As: The Union Budget of India is also known as the Annual Financial Plan.


• Fiscal Statement: The Union Budget can also be referred to as a Fiscal Statement as it outlines the government's finances for the upcoming year.


• Economic Plan: While the Union Budget does include economic planning elements, it is more commonly known as the Annual Financial Plan.


• None of the Above: This option is incorrect as the Union Budget is indeed known as the Annual Financial Plan.

• Definition: Fiscal deficit is the difference between total revenue and total expenditure of the government.


• Significance: It indicates the total borrowing requirements of the government to meet its expenditure.

• Revenue Deficit: It is the excess of revenue expenditure over revenue receipts.


• Budget Deficit: It is the difference between total revenue and total expenditure of the government.


• Economic Deficit: It is the difference between total expenditure and total income of the government.

• It reflects the overall health of the economy and the government's financial position.


• High fiscal deficit can lead to inflation and a decrease in the value of the currency.


• It is used as a measure of the government's fiscal discipline and sustainability.

• Fiscal deficit is a crucial indicator of the government's financial health and management of the economy.


• It is important for policymakers to monitor and control fiscal deficit to ensure economic stability and growth.

• Introduction of Zero-Based Budgeting: Zero-Based Budgeting was introduced in the Union Budget of 2016-17.


• Definition of Zero-Based Budgeting: Zero-Based Budgeting is a budgeting technique where all expenses must be justified for each new period. Unlike traditional budgeting methods that only consider incremental changes, zero-based budgeting starts from a "zero base" and every function within an organization is analyzed for its needs and costs.


• Objective of Zero-Based Budgeting: The main objective of zero-based budgeting is to reduce wasteful spending and ensure that all expenses are necessary and efficient.


• Implementation in Union Budget: By introducing zero-based budgeting in the Union Budget of 2016-17, the government aimed to streamline budget allocations, prioritize spending on essential services, and improve overall fiscal discipline.


• Impact of Zero-Based Budgeting: Zero-based budgeting has helped the government in identifying areas of inefficiency and reallocating resources to where they are needed the most. It has also encouraged better accountability and transparency in budgeting processes.

• Introduction: The Finance Minister's Budget speech is an important event in India's political calendar where the government outlines its financial plans for the upcoming year.



• Traditional Indian Salutation: The Finance Minister's Budget speech usually begins with the traditional Indian salutation "Satyameva Jayate."



• Meaning of "Satyameva Jayate": This phrase is in Sanskrit and translates to "Truth alone triumphs." It is a mantra from the ancient Indian scripture Mundaka Upanishad, emphasizing the importance of truth and honesty.



• Significance: By starting the Budget speech with "Satyameva Jayate," the Finance Minister is setting the tone for transparency, integrity, and accountability in the government's financial decisions.



• Symbolism: This salutation symbolizes the government's commitment to upholding truth and righteousness in its economic policies and budget allocations.

• Year: 1950


• Explanation: The first Union Budget of independent India was presented in the year 1950.


• Significance: This budget marked a significant moment in India's history as it laid the foundation for the country's economic policies and financial planning post-independence.


• Key Points:
  
  
  
  • It outlined the government's revenue and expenditure for the upcoming fiscal year.
  
  
  • It introduced various policies to promote economic growth and development in the newly independent nation.
  
  
  • It set the tone for future budgetary decisions that would shape India's economy in the years to come.
  
  
  
  

• Therefore, the first Union Budget of independent India was presented in the year 1950, setting the stage for the country's economic trajectory post-independence.

• Nirmala Sitharaman: Nirmala Sitharaman became the first woman Finance Minister of India to present the Union Budget in 2019. She is also the second woman to hold the office of the Finance Minister after Indira Gandhi.


• Indira Gandhi: Although Indira Gandhi served as the Prime Minister of India, she was not the Finance Minister who presented the Union Budget.


• Arun Jaitley and Pranab Mukherjee: Arun Jaitley and Pranab Mukherjee were both male Finance Ministers of India who presented the Union Budget during their respective tenures.

• Allows for adjustments and updates: The rolling budget allows organizations to make adjustments and updates throughout the fiscal year. This flexibility is crucial in a dynamic business environment where changes can occur rapidly.



• Enhances accuracy: By incorporating new information and data as the year progresses, the rolling budget can provide a more accurate financial forecast compared to traditional static budgets.



• Encourages forward-looking planning: With the rolling budget, organizations are encouraged to take a more proactive and forward-looking approach to financial planning. This helps in identifying potential issues early on and taking corrective actions in a timely manner.



• Improves decision-making: The ability to adjust the budget in real-time enables better decision-making based on the most up-to-date information available. This can lead to more informed and strategic business decisions.



• Increases accountability: Rolling budgets promote accountability as they require regular reviews and revisions. This ensures that budget holders are actively involved in the budgeting process and accountable for meeting their financial targets.

The Goods and Services Tax (GST) is a major tax reform introduced in India to simplify the indirect taxation system. It was implemented to replace various indirect taxes levied by the central and state governments.

• A: 2015-16


• B: 2016-17


• C: 2017-18


• D: 2018-19

The correct answer is C: 2017-18.

• The GST was officially launched on July 1, 2017, by the Government of India.


• It is a comprehensive indirect tax on the supply of goods and services throughout India.


• GST subsumed various central and state taxes such as excise duty, service tax, VAT, and others.


• The introduction of GST aimed to create a single, unified tax structure for the entire country, promoting ease of doing business and reducing tax evasion.

• T.T. Krishnamachari: He presented the "Black Budget" in 1957, which was known for proposing heavy taxes and increased public spending.


• Morarji Desai: He was a prominent Indian independence activist and later served as the Prime Minister of India.


• C.D. Deshmukh: He was a prominent Indian civil servant and the first Indian to be appointed as the Governor of the Reserve Bank of India.


• Jawaharlal Nehru: He was the first Prime Minister of India and played a crucial role in shaping the country's economic policies.

Therefore, the correct answer is T.T. Krishnamachari who presented the "Black Budget" in 1957.

• Finance Minister: Indira Gandhi


• Proposal: Nationalization of 14 major Indian banks


• Significance: This move was aimed at bringing about social welfare and reducing economic disparities in the country.


• Impact: The nationalization of banks played a crucial role in expanding the reach of banking services to rural areas and promoting financial inclusion.