06 MARK QUESATIONS AND ANSWERS
Q1. How is tax revenue different from administrative revenue?
Ans: Tax Revenue:-
Q2. What is a balanced government budget? Explain the multiplier effect of a balanced budget.
Q1. The following figures are based on budget estimates of Government of India for the year 2001 – 2002.
i) Fiscal Deficit
ii) Revenue Deficit and
iii) Primary deficit.
i) Fiscal Deficit = Total expenditure – Revenue receipts – Non-debt capital receipts = 3,75,223 – 2,31,745 – 15,164 – 12,000 = Rs. 1,16,314 billion.
ii) Revenue Deficit = Revenue expenditure – Revenue receipts
= 3, 10,566 – 2, 31,745 = Rs. 78,821 billion.
iii) Primary deficit = Fiscal deficit – Interest payments
= 1, 16,314 – 1, 12,300 = Rs. 4,014 billion.
Q2. From the following data about a government budget find
a) Revenue Deficit
b) Fiscal Deficit and
c) Primary Deficit.
Ans: a) Revenue Deficit = Revenue expenditure – (Tax revenue + Non-tax revenue) = 80 – (47+10) = 80 – 57 = 23 (cr.)
Fiscal Deficit = Borrowings = 32 (cr.)
Primary Deficit = Borrowings – Interest Payments 32 - 20 = 12 (cr.)
HIGHER ORDER THINKING SKILLS (HOTS)
What are the three levels at which the budget impacts the economy?
Ans: These below are the three levels at which the budget impacts the economy.
Aggregate fiscal discipline:- This means having control over expenditures, given the quantum of revenues. This is necessary for proper macro-economic performance.
Allocation of resources: - The allocation of resources based on social priorities.
Effective and efficient provision of programmes:- Effectiveness measures the extent to which goods and services the government provides its goals.