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Economics · 2024 · 6 marks
Government Budget and the EconomyGovernment Budget – Meaning and its Components6 marksAnalyselong answer
CBSE 2024 · Region 1 · Set 1 · Q16
Classify the following as Revenue receipts or Capital receipts. Give valid arguments in support of your answer :(i)Interest received on loan.(ii)Disinvestment receipts from the sale of a government company.(iii)Financial assistance by the Government of USA for promoting girl education in India.(b)Study the following chart carefully and analyse the changing trends in the government expenditure on :(I)Transport(II)Rural DevelopmentTREND OF MAJOR ITEMS OF EXPENDITURE(₹ lakh crore)
(b)(ii)Distinguish between ‘fiscal deficit’ and ‘revenue deficit’.
Classify the following as Revenue receipts or Capital receipts. Give valid arguments in support of your answer :
(i)
Interest received on loan.
(ii)
Disinvestment receipts from the sale of a government company.
(iii)
Financial assistance by the Government of USA for promoting girl education in India.
(b)
Study the following chart carefully and analyse the changing trends in the government expenditure on :
(I)
Transport
(II)
Rural Development
TREND OF MAJOR ITEMS OF EXPENDITURE
(₹ lakh crore)
(b)(ii)
Distinguish between ‘fiscal deficit’ and ‘revenue deficit’.
Marking-scheme solution
(i)
Interest received on loan is a revenue receipt because it neither creates any liability nor causes a reduction in assets of the government.
(ii)
Disinvestment receipts from sale of a government company are capital receipts as it causes a reduction in assets of the government.
(iii)
Financial assistance by the Government of USA for promoting girl education in India is a revenue receipt as it neither creates any liability nor causes a reduction in assets of the government.
(i)
As indicated in the given chart:
(I)
Transport: The expenditure on transport accounted for ₹ $\displaystyle 3.32$ lakh crore in the year $\displaystyle 2021$-22. In the year $\displaystyle 2022$-$\displaystyle 23$, a Revenue expenditure of ₹ $\displaystyle 3.90$ lakh crore was allocated for this sector. Out of the total budget expenditure of the year $\displaystyle 2023$-$\displaystyle 24$, ₹ $\displaystyle 5.17$ lakh crore was allocated to transport.
(II)
Rural Development: In the year $\displaystyle 2021$-$\displaystyle 22$, the expenditure on rural development accounted for ₹ $\displaystyle 2.29$ lakh crore. In the year $\displaystyle 2022$-$\displaystyle 23$, of the total revenue expenditure ₹ $\displaystyle 2.43$ lakh crore was allocated for rural development. ₹ $\displaystyle 2.38$ lakh crore was allocated for the development of rural sector from the total budget expenditure in the year $\displaystyle 2023$-24.
(b)(ii)
Fiscal deficit refers to excess of the government’s total expenditure over its total receipts excluding borrowing for a fiscal year.
Whereas;
Revenue Deficit refers to the excess of government’s revenue expenditure over revenue receipts for a fiscal year.
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CBSE Class 12 Economics past-paper question from the 2024board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.