NEVIL PATEL COACHING CLASS

Max. Marks: 25
Time: 60 Minutes
Topic: Ch-10 (Government Budget & the Economy)

General Instructions:
1) All Questions are compulsory.
2) Question number 1 to 5 carries one mark.
3) Question number 6 to 7 are three marks question and are to be answered in 30-50 words.
4) Question number 8 to 9 are four marks question and are to be answered in 50-80 words.
5) Question number 10 is six marks question and is to be answered in 80-120 words.

Read the following news report and answer Q01 to Q03. On the basis of the same:
10 Major Highlights of Budget 2020
• Empowering people to create wealth and boost purchasing power
• GST brings 60 lakh new tax payers
• Three pillars of union budget 2020 – (i) Aspirational India (ii) Economic Development (iii)
Caring Society
• Promoting education in India – Finance Minister has allocated a total of ₹99,300 crore to the
education sector of India.
• National infrastructure policy to spend ₹100 lakh crore over the next 5 years
• Building data centre parks and National Quantum Tech Plan
• Developing the structure of tourism
• Governance is the key
• Empowering the scheduled class and scheduled tribes – Government has allocated ₹85 thousand
crore for the scheduled class and other backward classes for the year 2020-21 and ₹53,700 crore
for the scheduled tribes

Q01. Goods and Services Tax (GST) is a ________ tax. (Fill in the blank)
Q02. “GST brings 60 lakh new taxpayers”. What will be its likely effect on revenue deficit in
government budget? (Choose the correct alternative)
a) Increase b) Decrease c) Constant d) None of these
Q03. “National Infrastructure policy to spend ₹100 lakh crore over the nest 5 years.” Building
infrastructure facilities is a _________ Expenditure in a government budget. (Choose the correct
alternative)
a) Revenue b) Capital c) Development d) both (b) and (c)
Q04. Which of the following statement is incorrect? (Choose the correct alternative)
a) Revenue receipts are regular in nature
b) There is no future obligation to return the amount in case of revenue receipts
c) Capital receipts either create an asset or cause a reduction in liabilities of the government
d) Borrowings are treated as capital receipts as they lead to increase in liability
Q05. Capital Expenditure increases the liabilities of the government. True or False? Give Reason.
Q06. “Fiscal Deficit indicates the total borrowing requirements of the government from all sources.”
Elucidate.
Q07. Identify the following as revenue receipts and capital receipts. Give Reasons.
a) Sale of 40% shares of public sector undertaking to a private enterprise.
 b) Profits of LIC, a public enterprise.
c) Amount borrowed from USA for construction of flyovers.
Q08. From the following data about a government budget find:
a) Fiscal Deficit
b) Primary Deficit

Items (₹ in crore)
(i) Tax Revenue 1000
(ii) Revenue Deficit 775
(iii) Interest Receipts by the government on net domestic lending 400
(iv) Recovery of loans 135
(v) Capital Expenditure 575
(vi) Proceeds from sale of shares of PSUs 100
(vii) Interest payments on accumulated debts 1000

Q09. Can there be a fiscal deficit without revenue deficit? Explain.

Q10.
a) Define ‘Revenue Receipts’ in a government budget. Do ‘Disinvestment’ and ‘Loan proceeds
from abroad” constitute revenue receipts of the government? Give reason.
b) Give reasons, classify the following as direct and indirect taxes:
(i) Capital Gains Tax
(ii) Custom Duty