UPSC Prelims Marathon 6 May – Public Finance in India – 2025

With reference to Plan and Non-Plan expenditure in the context of Indian public finance, consider the following statements:
1.Plan expenditure generally refers to asset-creating and productive spending.
2.The distinction between Plan and Non-Plan expenditure was introduced based on the recommendations of the C. Rangarajan Committee.
3.Non-Plan expenditure includes items like maintenance of assets such as hospitals and schools, which are vital for development but often receive less priority during budget cuts.
Which of the statements given above is/are correct?

With reference to government receipts in India, consider the following statements:
1.Total receipts of the government include both revenue and non-revenue sources.
2.Interest received from loans given to public institutions within and outside the country is classified as non-tax revenue.
3.Grants received by the Central Government are considered internal revenue receipts.
Which of the statements given above is/are correct?

With reference to Revenue Expenditure and Revenue Deficit in the Indian context, consider the following statements:
1.Revenue expenditure includes both social sector spending and defence expenditure, but does not create productive assets.
2.Revenue deficit indicates that the government’s revenue receipts are higher than its revenue expenditures.
3.A revenue surplus implies the government can allocate excess revenue to capital investments, provided the surplus is managed judiciously.
Which of the statements given above is/are correct?

Consider the following features of a budgeting system:
1. Requires every program to be justified from scratch periodically
2. Ignores previous year’s budget allocations while preparing the budget
3. Encourages re-evaluation and termination of obsolete programs
Which of the above features are associated with Zero-Base Budgeting (ZBB)?

With reference to the components of the Union Budget in India, consider the following statements:
1.A capital receipt includes all forms of borrowing and loan recoveries received by the government.
2.Revenue Budget shows the government’s income and expenditure related to asset creation.
3.Interest received on loans given by the government is part of capital receipts.
Which of the statements given above is/are correct?

With reference to public finance in India, consider the following statements:
1.Capital Deficit is a formally recognized term in Indian public finance used to describe shortfalls in capital expenditure.
2.Fiscal Deficit reflects the gap between the government’s total receipts and total expenditures, including both revenue and capital components.
3.A high fiscal deficit indicates that the government is financing part of its expenditure through borrowings or other liabilities.
Which of the statements given above is/are correct?

With reference to Indian public finance, consider the following statements:
1.Primary Deficit is the difference between Fiscal Deficit and interest payments for a given year.
2.Monetised Deficit refers to that part of the fiscal deficit which is financed directly by the Reserve Bank of India.
3.Both Primary Deficit and Monetised Deficit are no longer used in India after the adoption of the FRBM Act, 2003.
Which of the statements given above is/are correct?

With reference to budgetary practices in India, consider the following statements:
1.A deficit budget refers to a situation where the government proposes to spend more than it expects to receive in a given financial year.
2.Surplus budgets are generally avoided by developing countries as they may reflect reduced emphasis on developmental spending.
Which of the statements given above is/are correct?

With reference to the concept of deficit financing in India, consider the following statements:
1.External grants are the most preferred means of deficit financing as they involve no repayment or interest.
2.Internal borrowings are preferred over external borrowings due to their lesser impact on economic sovereignty.
3.Printing currency to finance deficits can trigger inflation and is generally considered the last resort.
Which of the statements given above is/are correct?