Read the passage given below and answer the following questions from 1 to 4. India has scaled back expenditure, including on productive assets that aid economic growth, as the government is confronted with the risk of its budget deficit blowing out. Capital expenditure-the money spent on creating, maintaining or improving fixed assets like roads and factories-Stood at 40% of the budgeted amount in the six months to September, down from 55.5% in the year-ago period, data from the government's Controller General of Accounts show. The overall spending during the period was 49% of the budget aim compared to 53% last year. That's despite Prime Minister Narendra Modi's Government outlining measures worth more than 21 trillion rupees (281 billion) to counter the economic and social fallout of the Covid-19 outbreak. A closer look at the numbers shows the bulk of the spending was directed towards the poor and the farmers, with crucial sectors such as coal, power, shipping and steel receiving less than a third of their annual budget allocation. Spending on capital assets has so far trailed the so-called revenue expenditure that includes interest payments and overheads such as salaries, the data released last week showed. Modi's Government placed spending curbs on some ministries from April through December to manage its cash flow. Source: Business Standard, Nov. 5, 2020

1. Capital expenditure of the government ............ the assets of the government:

1. Increases
2. Decreases
3. Both [a] and [b]
4. None of these

2. Expenditure on health due to Covid-19 is ............ expenditure of the government.

1. Direct
2. Revenue
3. Both [a] and [b]
4. None of these

3. The overall spending has......... as compared to last year.

1. Increased
2. Decreased
3. Both [a] and [b]
4. None of these

4. A closer look at the numbers shows the bulk of spending was directed towards the poor and the.............?

1. Farmers
2. Labour
3. Manager
4. None of these

 
 

How are capital receipts different from revenue receipts? Discuss briefly.

Discuss the issue of deficit reduction.

Giving reasons, categorise the following into direct of tax and indirect tax:

1. Corporation tax.
2. Sales tax.
3. Wealth tax.
4. Service tax.

Which of the following is/are included in the revenue budget of the government? Give reasons for your answer.

1. Tax revenue.
2. Non-tax revenue.
3. Loans received from foreign governments.
4. Small savings.
5. Interest payments.

We suppose that C = 70 + 0.70Y D, I = 90, G = 100, T = 0.10Y.

1. Find the equilibrium income.
2. What are tax revenues at equilibrium income?

Does the government have a balanced budget?

If you are appointed as the Finance Minister of India, which taxes would you prefer, direct taxes or indirect taxes and why?

Differentiate between Revenue Budget and Capital Budget.

What is the difference between Revenue Budget and Capital Budget?