XII Economics Government Budget worksheet
1. Direct tax is a tax which is imposed on
a) Corporations only
b) None of these
c) Individuals only
d) Individuals and corporations
2. An example of a direct tax is
a) Entertainment tax
b) Sales tax
c) VAT
d) Income tax
3. The major source of Revenue receipts for the government is not
a) Tax Revenue
b) Income tax
c) Wealth tax
d) Profits
4. The policies useful to reduce inequalities of income are the
a) Monetary policies
b) Public distribution policies
c) Budgetary policies
d) Foreign policies
5. Budgetary policies are implemented by the
a) Foreign sector
b) Finance Ministry
c) Government
d) Private sector
6. Capital Receipts
a) Create liability for the private sector
b) Create liability for the government
c) Do not create liability for the private sector
d) Do not create liability for the government
7. Disinvestment is a
a) Capital Expenditure
b) Revenue Expenditure
c) Capital Receipts
d) Revenue Receipts
8. Define a Budget.
9. Classify the following statements as revenue receipts or capital receipts. Give valid reasons in support of your answer.
(a) Financial help from a multinational corporation for victims in a flood affected area.
(b) Sale of shares of a Public Sector Undertaking (PSU) to a private company,Y Ltd.
(c) Dividends paid to the Government by the State Bank of India.
(d) Borrowings from International Monetary Fund (IMF). (C.B.S.E. Outside Delhi 2019)
10. What are the main items of Capital Receipt?
11. What are the implications of revenue deficit? State two measures of reduce this deficit.
12. Find budget deficit from the following data:
| Items | (₹ in Crore) |
| 1. Revenue receipts | 40,000 |
| 2. Revenue expenditure | 30,000 |
| 3. Capital receipts | 30,000 |
| 4. Capital expenditure | 50,000 |
13. How can you source Fiscal deficit?
14. What are the implications of fiscal deficit?
15. What are the two types of Revenue Receipts?
Short Answer Questions
16. Differentiate Direct taxes and Indirect taxes. Also give two examples of each.
17. The following figures are based on budget estimates of Govt. of India for
the year 2016-17. Calculate
1. Fiscal deficit
2. Revenue deficit
3. Primary deficit
18. Explain the objectives of the Government Budget.
1. Direct tax is a tax which is imposed on
a) Corporations only
b) None of these
c) Individuals only
d) Individuals and corporations
Ans: d) Individuals and corporations
2. An example of a direct tax is
a) Entertainment tax
b) Sales tax
c) VAT
d) Income tax
Ans: d) Income tax
3. The major source of Revenue receipts for the government is not
a) Tax Revenue
b) Income tax
c) Wealth tax
d) Profits
Ans: d) Profits
4. The policies useful to reduce inequalities of income are the
a) Monetary policies
b) Public distribution policies
c) Budgetary policies
d) Foreign policies
Ans: c) Budgetary policies
5. Budgetary policies are implemented by the
a) Foreign sector
b) Finance Ministry
c) Government
d) Private sector
Ans: c) Government
6. Capital Receipts
a) Create liability for the private sector
b) Create liability for the government
c) Do not create liability for the private sector
d) Do not create liability for the government
Ans: b) Create liability for the government
7. Disinvestment is a
a) Capital Expenditure
b) Revenue Expenditure
c) Capital Receipts
d) Revenue Receipts
Ans: c) Capital Receipts
8. Define a Budget.
Ans: The budget is a statement of the government's expected receipts and expenditures for the fiscal year. A fiscal year in a country (most notably India) goes from April 1 to March 31.
9. Classify the following statements as revenue receipts or capital receipts. Give valid reasons in support of your answer.
(a) Financial help from a multinational corporation for victims in a flood affected area.
(b) Sale of shares of a Public Sector Undertaking (PSU) to a private company,Y Ltd.
(c) Dividends paid to the Government by the State Bank of India.
(d) Borrowings from International Monetary Fund (IMF). (C.B.S.E. Outside Delhi 2019)
Answer:
(a) Financial help from a multinational corporation for victims in a flood affected area is a revenue receipt as it neither creates any asset not reduces any liability of the government.
(b) Sale of shares of a Public Sector Undertaking (PSU) to a private company, Y Ltd. is a capital receipt as it reduces the assets of the government.
(c) Dividends paid to the Government by the State Bank of India area is a revenue receipt as it neither creates any asset not reduces any liability of the government.
(d) Borrowings from International Monetary Fund (IMF) is a capital receipt as it increases the liabilities of the government.
10. What are the main items of Capital Receipt?
Ans: The primary items are:
1. Market Loans raised by the government from the general population.
2. Government Borrowings.
3. Loans from foreign governments and international financial institutions.
11. What are the implications of revenue deficit? State two measures of reduce this deficit. (C.B.S.E Outside Delhi 2011 Comp.)
Answer:
The excess of the government’s revenue expenditure over the revenue receipts is called the revenue deficit.
Given the same level of the fiscal deficit, a higher revenue deficit is worse than a lower one. High revenue deficit implies that the government should follow contractionary fiscal policy, that is, increase tax and/or reduce spending. In a less developed countries, it is difficult to force people to pay higher taxes or to cut expenditure on development activities.
Thus, the government usually finance its revenue deficit through borrowings. A revenue deficit implies a repayment burden in the future, not matched by any benefits via investment. It leads to rise in the prices and hampers the progress of the economy. Measures to reduce the revenue deficit are following:
- Framing suitable policies
- Proper utilisation of revenue receipts
12. Find budget deficit from the following data:
| Items | (₹ in Crore) |
| 1. Revenue receipts | 40,000 |
| 2. Revenue expenditure | 30,000 |
| 3. Capital receipts | 30,000 |
| 4. Capital expenditure | 50,000 |
Budget Deficit = (Revenue Expenditure + Capital Expenditure) – (Revenue Receipts + Capital Receipts)
= (30,000 + 50,000) – (40,000 + 30,000)
= 80,000 – 70,000 = ₹ 10,000 crore
13. How can you source Fiscal deficit?
Ans. Borrowing, Deficit financing
14. What are the implications of fiscal deficit?
Ans. Debt trap, inflation, foreign dependence, hampers future growth
15. What are the two types of Revenue Receipts?
Ans: Tax revenue and non-tax revenue are the two types of revenue received.
Short Answer Questions
16. Differentiate Direct taxes and Indirect taxes. Also give two examples of each.
Ans: Direct taxes are those that are imposed immediately on a person's property or income. The public pays these taxes directly to the government. Income tax, wealth tax, corporate tax, and other taxes are examples.
Indirect taxes are levied on people's income and assets as a result of their consumer spending. These taxes are imposed on one individual, but they are paid by another. Customs duties, excise duties, sales tax, service tax, and other taxes are examples.
17. The following figures are based on budget estimates of Govt. of India for
the year 2016-17. Calculate
1. Fiscal deficit
2. Revenue deficit
3. Primary deficit
Ans: 1. Fiscal deficit = Total expenditure – Revenue receipts – Non debt receipts
= 3, 75,223 - 2,31,745-(15,164+12,000)
= Rs. 1, 16,314 billion
2. Revenue deficit = Revenue expenditure – Revenue receipts
= 3, 10,566-2, 31,745
= Rs. 78,821 billion
3. Primary deficit = Fiscal deficit – Interest payments
= 1, 16, 314-1, 12, 300
= Rs. 4014 billion
18. Explain the objectives of the Government Budget.
Ans: The key goals of the government budget are listed below.
1. Activities to ensure resource reallocation - The government must reallocate resources while taking social and economic factors into account.
2. Redistribution activities - To eliminate inequities, the government redistributes income and wealth.
3. Stabilizing actions - The government seeks to keep the economy stable by preventing business swings.
4. Management of public enterprises - Through its public enterprises, the government engages in commercial activities such as natural monopolies, heavy manufacturing, and so on.
