Public Finance-Borrowing, Deficits & Debt PYQs — 14 UPSC CSE Previous Year Questions

Question 1

Which of the following statements with regard to recommendations of the 15th Finance Commission of India are correct? It has recommended grants of ₹4,800 crores from the year 2022-23 to the year 2025-26 for incentivizing States to enhance educational outcomes. 45% of the net proceeds of Union taxes are to be shared with States. ₹45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms. It reintroduced tax effort criteria to reward fiscal performance. Select the correct answer using the code given below.

Accepted Answer

C. I, III and IV

Question 2

A country's fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country's interest liabilities are ₹1,500 crores. What is the gross primary deficit?

Accepted Answer

A. ₹48,500 crores

Question 3

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings of ₹10,000 crores and interest payments of ₹6,000 crores. Which of the following statements are correct? Revenue deficit is ₹20,000 crores. Fiscal deficit is ₹10,000 crores. Primary deficit is ₹4,000 crores. Select the correct answer using the code given below.

Accepted Answer

D. I, II and III

Question 4

Consider the following statements : Statement-I : If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be able to exercise their claims to receive payment. Statement-II : The USA Government debt is not backed by any hard assets, but only by the faith of the Government. Which one of the following is correct in respect of the above statements ?

Accepted Answer

A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I

Question 5

With reference to the Indian economy, consider the following statements : A share of the household financial savings goes towards government borrowings. Dated securities issued at market-related rates in auctions form a large component of internal debt. Which of the above statements is/are correct ?

Accepted Answer

C. Both 1 and 2

Question 6

Which one of the following effects of creation of black money in India has been the main cause of worry to the Government of India?

Accepted Answer

D. Loss of revenue to the State Exchequer due to tax evasion

Question 7

In the context of the Indian economy, non-financial debt includes which of the following?

Housing loans owed by households
Amounts outstanding on credit cards
Treasury bills

Select the correct answer using the code given below:

Accepted Answer

D. 1, 2 & 3

Question 8

In India, deficit financing is used for raising resources for

Accepted Answer

A. economic development

Question 9

Which one of the following is likely to be the most inflationary in its effect?

Accepted Answer

D. Creating new money to finance a budget deficit

Question 10

In the context of governance, consider the following:

Encouraging Foreign Direct Investment inflows
Privatization of higher educational Institutions
Down-sizing of bureaucracy
Selling/offloading the shares of Public Sector Undertakings

Which of the above can be used as measures to control the fiscal deficit in India?

Accepted Answer

D. 3 & 4 only

Question 11

With reference to the National Investment Fund to which the disinvestment proceeds are routed, consider the following statements:

The assets in the National Investment Fund are managed by the Union Ministry of Finance.
The National Investment Fund is to be maintained within the Consolidated Fund of India.
Certain Asset Management companies are appointed as the fund managers.
A certain proportion of annual income is used for financing select social sectors.

Which of the statements given above is/are correct?

Accepted Answer

C. 3 & 4

Question 12

Match List I with List II and select the correct answer using the codes given below the lists:

	List-I (Term)		List-II (Explanation)
A.	Fiscal deficit	1.	Excess of Total Expenditure over Total Receipts
B.	Budget deficit	2.	Excess of Revenue Expenditure over revenue receipts
C	Revenue deficit	3	Excess of Total Expenditure over Total Receipts less borrowings
D.	Primary deficit	4.	Excess of Total Expenditure over Total Receipts less borrowings and Interest Payments

Accepted Answer

A. A-3, B-1, C-2, D-4

Question 13

Consider the following: Market borrowing Treasury bills Special securities issued to RBI Which of these is/are component(s) of internal debt?

Accepted Answer

D. 1, 2 & 3

Question 14

Assertion (A): Fiscal deficit is greater than budgetary deficit. Reason (R): Fiscal deficit is the borrowing from the Reserve Bank of India plus other liabilities of the Government to meet its expenditure.

Accepted Answer

A. Both A & R are true and R is the correct explanation of A