Download App

Economics 3 Marks Each

Budget · Gujarat Board (GSEB) STD 11 Commerce (GSEB - English Medium). 11 questions.

Questions

3 Marks Each

🎯

Test yourself on this topic

11 questions · timed · auto-graded

Question 13 Marks
Give function and the sources of income of 'Panchayats'.
Answer
  • In general and terms Panchayat means assembly of five members. In india distribution of power is at three levels.
    • Central Government
    • State Government
    • Local Self Government Institute. .
      • " Local Government :
        • In rural area such powers are given to Granm Panchayat.
        • In this respect according to the provision of constitution Gram Panchayat has freedom to frame plans for development and social welfare.
        • This decision is taken by Gram Panchayat through gram committee.
        • The reason behind it is local people can understand the problems and can solve it properly.
        • In India since ancient time Gram Panchayat is working as a mile stone.
        • In India after the implementation of Panchayati Raj Act, this Panchayat has become financially sound, for its development plans, the responsibility of the state is reduced and central government directly deposits the finance in the development project of Gram Panchayat.
      • Function of Panchayat :
        • The following responsibilities are fulfilled by Panchayat in respect to rural development and social services.
        • Public Cleanliness arrangement
        • Facility for Public Health
        • Arrangement of Rural Primary School
        • Planning for water facility for Rural area
        • Road facility for Village.
View full question & answer→
Question 23 Marks
Give details of the income and expenditure sides of the capital account of a state budget.
Answer
  • Following income are shown in the capital account of state government budget :
    • Internal debt of state government.
    • Loans and advances from central.
    • Advances received from centre for project.
    • Recovery of other loans and advances.
    • Other capital income like income from disinvestment.
  • Following details of capital expenditure of state government are shown.
    • Capital expenditure done behind social service.
    • Capital expenditure incurred behind economic services.
    • Capital expenditure behind general services
    • Payment of public debt.
    • Other expense like loan and advances given to local self government institute.
View full question & answer→
Question 33 Marks
Explain the concepts of -
$A.$ Revenue expenditure,
$B.$ Revenue income,
$C.$ Capital income,
$D.$ Capital expenditure.
Answer
  • Revenue Expenditure :
    • In revenue expenditure of budget, two types of expense are taken into calculation :
    • Consumption Expenditure,
    • Transfer Payments.
    • In consumption expenditure during the year payment of Wages-Salary to the employees, Administrative expense of defense department, expenses to collect tax, Administrative expense etc. are shown.
    • While in transfer of payments, Payment of interest, union territory, Local self government institution, etc. as given grant and donation expenses, grant given by center to state, and financial aid (subsidy) are included.
    • In general it is ideal to make payment of revenue expenditure from revenue income.
  • Revenue income :
    • In the current period, the direct and indirect taxes, profits of public enterprises, fees and fines from public utilities etc. constitute the revenue income.
    • There are two types of revenue income indicated in the budget :
      • Tax revenue :
        • Income tax, property tax, gift tax, company tax, excise duty, custom duty and other direct and indirect tax incomes are shown.
      • Incomes other than tax incomes :
        • Income from currency, interest etc.
        • Profit and dividends from public sector enterprises.
        • Fees and fines from public utilities.
        • Income from education, health, housing, broadcasting etc.
        • Income from government agriculture and ancillary services.
        • Industries, mines, transport, communication etc.
        • Other administrative incomes including these incomes.
  • Capital Income :
    • Loan taken by state from country's market or foreign, debt taken from central bank, sale of treasury bill, and income from disinvestment are capital income.
    • In addition to income from debt and short terms saving scheme income are also considered as capital income shown on income side of capital account.
  • Capital Expenditure: In capital account following expenditures are shown.
    • Payment of debt by government.
    • Expenses done behind advances given to state government or others.
    • Capital Expenditure done in social and economic services.
    • Capital expenditure done for defense.
    • Investment done in physical assets.
View full question & answer→
Question 43 Marks
Discuss effects of a Budget.
Answer
  • Any budget is framed to fulfill three objectives.
  1. Economic Stability,
  2. Economic Growth,
  3. Economic Equality.
  • The following are the Effect of budget on economy and society :
    • Government has to get the consent from the representatives of the assembly.
    • So it has to take in consideration income to plan the expenditure.
    • So there is control over unnecessary expenditure and fiscal situation is found in Government.
    • Distribution of financial tools is done according to Economic and Social importance between the different section like Agriculture, Industries, Services.
    • In Budget thus, limited financial resources are distributed in the country in proper way.
    • The objective of budget is to keep economic stability Government controls inflation and depression by managing tax revenue and expenditure that keeps the economy stable.
    • If the characteristics of inflation are seen then to control it surplus budget is framed and if depression arises then deficit budget is framed.
    • With the help of tax revenue, consumer's income affected and demand is controlled.
    • Thus efforts are made to control inflation while in depression through public expenditure and deficit supplement creates demand.
    • Budget is helpful to free the country from the effects of boom-recession of other countries in present globalization.
    • Economy is taken to a planned direction through budget by making optimum use of country's resource and thereby economic development is possible and proper distribution of financial resources with capital investment.
    • Through budget along with economic growth economic equality can be maintained. Proper balance is maintained between them.
    • In budget different steps are taken so that income and productivity of poor increases thereby reducing income inequality and can give speedy economic development.
    • Budget gives the idea of what type of economic policy will be adopted by the government means in which direction government plans to go.
    • Budget Effects Consumers, Producers, Distributors and all the class.
    • Every class gets the chance to make their plan in this respect.
    • Producers for their production, Jobbers for their tax planning. etc.
    • Through budget economic growth and economic development of the country Can be given proper direction.
View full question & answer→
Question 53 Marks
Give the meaning of Revenue deficit, Budgetary deficit, Fiscal deficit and Primary deficit
Answer
  • In India mainly the following four Types of Deficit are shown in Budget.
  1. Revenue Deficit
  2. Budgetary Deficit
  3. Fiscal Deficit
  4. Primary Deficit
  • Revenue Deficit :
    • When in Budget Revenue expenditure is more than revenue income then the difference between these two is Revenue Deficit. In the form of formula.
    • Revenue Deficit $=$ Revenue Income $-$ Revenue Expenditure.
    • In terms of dealing and calculation, revenue deficit shows non-performance of government.
  • Budgetary Deficit :
    • When Total income $($Revenue income $+$ Capital Income$)$ less than Total Expenditure $($Revenue Expense issued Expense$)$ then Budgetary deficit comes into existence.
    • New currency notes are issued by the government to meet the deficit, it is called deficit supplement.
  • Fiscal Deficit :
    • When Government's Total Expenditure $($Planned $\&$ Unplanned$)$ is more than Government's Revenue Income and Capital Income, Fiscal Deficit arises.
    • To meet this Government borrows advances from market it is called capital income.
    • But in reality it is Government's Debt.
    • In short, by adding budgetary deficit with debt from market we get fiscal deficit Fiscal Deficit $=$ Total Expenditure $-$ Total Income $($Excluding market borrowing$)$
  • Primary Deficit :
    • When payment of interest is deducted from fiscal deficit the left amount is Debt created in past and payment of interest is done in present will be deducted which gives current year's real income and expenditure.
    • In short, Primary Deficit $=$ Budgetary deficit $-$ Payment of Interest.
View full question & answer→
Question 63 Marks
Give the reasons responsible for introduction of $GST$ in India.
Answer
$GST$ in India is introduced to:
  • Impose a single tax on a particular good/service by eliminating taxing it multiple times by states and centre, the way it used to happen before $GST$.
  • Eliminate the difference in tax rates between states for similar good/services.
  • Reduce the cost of collecting the tax as well as making its administration simpler.
  • Ease the digital procedures of tax collection.
  • Reduce tax evasion and avoidance and make the indirect tax structure more productive in terms of raising revenues.
  • Reduce the burden of indirect taxes on people.
View full question & answer→
Question 73 Marks
Write about the income and expenditure of revenue account of state government.
Answer
  • The following income are shown in the revenue of state budget.
  • The share of the state as suggested by finance ministry from the central tax amount $($Income tax, Octroi etc$),$
  • State government collects the following tax according to power given by constitution.
    • Land Revenue,
    • Stamp duty,
    • Tax from agricultural income,
    • State Octroi $\&$ Excise,
    • Sales tax $-$ Value Added Tax $(VAT)$,
    • Vehicle tax,
    • Electricity tax,
    • Entertainment tax, lb Land and Property tax,
    • Wealth and wealth $($Property$)$ Agreement and other taxes.
  • Other income like Grant, Donation or Gift.
  • Other non-tax income like loan rent acquired from state property, state service value, state owned public unit profit, fine or special tax.
  • Revenue expenditure includes, social, economic, general services, expenditure and grant given to local self govt. institute.
  • Social services includes education, health, nutrition information transmission, welfare scheme for backward class. etc.
  • While economic services includes Agriculture, Rural Development, Irrigation, Industries, Transportation, Communication, Science & Technology etc.
  • While general services includes Administrative Services, Pension and Retirement Benefit, Expense behind financial services.
View full question & answer→
Question 83 Marks
What is deficit budget? In which situation it is beneficial?
Answer
  • Budget in which estimated expenditure is more than estimated income then it is called deficit budget.
  • Deficit budget = Expected Expenditure > Expected income.
  • Most of the developing countries required more finance for economic development.
  • On other side capacity of paying tax by public decreases.
  • So deficit budget becomes inevitable.
    • Benefit : In the following situation deficit budget is beneficial.
      • Deficit budget is welcomed in developing Countries for economic development.
      • In such countries due to lack of capital natural resources remain unused.
      • Speedy economic development becomes difficult due to poverty.
      • In this situation deficit budget makes use of natural resources and helps in speedy economic development.
      • When economy is in depression, deficit budget helps in increasing effective budget and opportunity for unemployment.
      • Tax revenue can he reduced so public can get freedom from it.
      • Deficit budget is useful for developing countries to provide basic services like education, health. etc. for t he benefit of the public.
      • To reduce economic inequality, deficit budget helps to get finance for different scheme, for helps.
View full question & answer→
Question 93 Marks
Write short note on state government budget.
Answer
  • Introduction :
    • India's administration is of three levels.
    • So state government has to perform their responsibilities mentioned in constitution.
    • Like central, state government also presents budget, in which expected income and expected expenditures are mentioned.
    • State budget is presented by —state finance ministers. It is essential to get the consent from the representative of the public in the —vidhan sabha for the expected amount to be spent and income for the next financial year.
    • State budget is discussed in the vidhan sabha, in it changes are done and final budget is approved with majority.
    • Like central, state government also implements its approved budget from $1$" April to $31$" March The main difference between union budget and state budget is that union budget has division of expenditure in planned and unplanned expenditure while state government budget is divided into development oriented expense and Non development oriented expenses.
    • In general, the expenditure which gives speed to economic development in a direct way are termed as development oriented expenditure. e.g. Expense on agriculture or irrigation facilities while non-development oriented expenditure affects the long term development in indirect way. e.g. Expenditure on pension.
    • Most of the states of India has the complaint that the responsibilities delegated to them are more as compared to the financial income provided.
View full question & answer→
Question 103 Marks
Discuss Merits and Demerits of Balanced Budget
Answer
  • Meaning :
    • According to the vision of calculation all the budget are balanced because the receipts and payments both the side of the Budget's financial values are shown same.
    • But it is divided into Balanced and Unbalanced budget to mention the real estimation of income and expense.
    • In simple word, a type of budget in which the government's estimated total expenditure is just equal to the estimated total income
    • Balance budget is ideal.
    • The budget in which the government's estimated income is equal to the estimated expenditure means Estimated Expenditure = Estimated Income then it is Balanced Budget.
    • In other words, A budget in which Current Expenditure and Current Income are same is called Balanced Budget.
    • It means all the government expenditure of the year are met by the tax income of that year is called Balanced Budget.
    • In this type of budget the provision of expenditure is made keeping in mind the income of taxes,
    • So there are no ups and down in the total expenditure.
    • In short, Balanced Budget accepts the economic situation in the form of present scenario and does not allow to affect the budget and remain stable.
    • If the budget is balanced then there is no change in the expenditure of society.
    • In short, there will be no efforts to change the total expenditure in balanced budget.
    • The budget in which the Government's Total Expenditure $($Revenue $+$ Capital$)$ is made equivalent with the revenue income is a Balanced Budget.
    • The conclusion behind this type of budget is that Government should cut down its expenses if the income is reduced.
View full question & answer→
Question 113 Marks
Describe the meaning and characteristics for Budget
Answer
  • Meaning of Budget :
    • In general, budget is a financial statement of the expected income and expenditure.
    • In other words, to be done in the next financial year.
    • It presents the revenue and expenditure of the coming year.
    • "A government budget is an annual accounting statement of the item-wise estimates of expected revenue and anticipated expenditure of government for a new fiscal year.
    • " The statement presented by the central government $($municipal corporation, Nagar Panchayat$)$ about the proposal of expected income and expenditure for the next financial year is called budget
  • Characteristics of Budget :
    • Budget shows the amount of income and expenditure.
    • Budget is presented for the next coming financial year.
    • The main objective of budget is to increase economic development and public welfare.
    • This expectation is exactly for one year.
    • State government presents the budget in legislative assembly $($Vidhan Sabha$)$ and Central Government presents the budget in parliament to get the consent of $MLA's$ and $MP's.$
    • After this the proposal of Budget is discussed in lok sabha and rajya sabha and with the changes and after getting majority the budget is approved.
    • In general, budget is presented by central and state finance minister.
    • In India budget is presented for the year $El"$ April to $31"$ March$).$
    • Central Government in general presents at the end of February in lok sabha.
    • Budget is presented according to the article$-112(1)$ of the constitution. This budget is presented in two types -. $A$. Railway Budget. $B$. General Budget.
    • In common terms budget is financial planning of government. It gives introduction of government activities. It is the mirror which shows which path is followed by government.
View full question & answer→
Generate Paper FreeAll Budget topics
3 Marks Each - Economics STD 11 Commerce Questions - Vidyadip