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Economics · 2024 · 6 marks
Government Budget and the EconomyGovernment Budget – Meaning and its Components6 marksUnderstandlong answer
CBSE 2024 · Region 1 · Set 2 · Q16
(a) (i) Study the following chart carefully and analyse the changing trends in the government expenditure on: (I) Agriculture and Allied Activities…
(a)(i)
Study the following chart carefully and analyse the changing trends in the government expenditure on :
(I)
Agriculture and Allied Activities
(II)
Transport
TREND OF MAJOR ITEMS OF EXPENDITURE
(₹ lakh crore)
(a)(ii)
Distinguish between ‘Revenue deficit’ and ‘Primary deficit’.
OR
(b)
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.
Marking-scheme solution
(a)(i)
As indicated in the given chart:
(I)
Agriculture and Allied Activities: The expenditure on agriculture and allied activities accounted for ₹ $\displaystyle 1.43$ lakh crore in the year $\displaystyle 2021$-22. In the year $\displaystyle 2022$-$\displaystyle 23$, revenue expenditure ₹ $\displaystyle 1.36$ lakh crore was allocated for this sector. Out of total budget expenditure in the year $\displaystyle 2023$-$\displaystyle 24$, ₹ $\displaystyle 1.44$ lakh crore was allocated for the development of this sector.
(II)
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)
Revenue Deficit refers to the excess of government’s revenue expenditure over revenue receipts for a fiscal year.
Whereas;
Primary deficit refers to the difference between fiscal deficit and interest payments.
(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.
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CBSE Class 12 Economics past-paper question from the 2024 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.