Budget Basics — Set 4

Correct Answer: B. Primary Deficit

• **Customs Duty** = a tax levied on goods imported into or exported out of India, collected at ports of entry and governed by the Customs Act, 1962. • **Administered by CBIC** — Central Board of Indirect Taxes and Customs; it protects domestic industries (protective tariff) and raises government revenue (revenue tariff). • 💡 Wrong-option analysis: [Option A] Excise Duty: levied on goods manufactured within India; [Option B] GST: comprehensive indirect tax that replaced most taxes except customs; [Option D] Octroi: a local body tax on goods entering a town, not a central government levy.

Correct Answer: D. The Chief Economic Adviser

• **GST (Goods and Services Tax)** = a unified indirect tax on supply of goods and services across India, subsuming central excise, service tax, VAT, and other levies. • **Implemented 1 July 2017** — introduced under the 101st Constitutional Amendment Act, 2016; structured as CGST (Centre), SGST (State), and IGST (inter-state). • 💡 Wrong-option analysis: [Option A] VAT: Value Added Tax, replaced by GST for most goods; [Option B] Service Tax: subsumed into GST; [Option D] Central Excise: replaced by GST except for petroleum products and alcohol.

Correct Answer: C. Creation of assets like roads and bridges

• **GST Council** = a constitutional body under Article 279A that recommends GST rates, exemptions, and rules to both the Centre and States. • **Chaired by Union Finance Minister** — it has Finance Ministers of all states as members; decisions are made by a three-fourths majority of votes cast. • 💡 Wrong-option analysis: [Option A] Finance Commission: recommends tax devolution, not GST rates; [Option B] CBIC: implements GST, does not set rates; [Option D] NITI Aayog: policy body, has no role in GST rate setting.

Correct Answer: B. Not votable by Parliament

• **IGST (Integrated GST)** = the GST levied by the Central Government on inter-state supply of goods and services, which is then apportioned between the Centre and the destination state. • **Destination-based** — revenue goes to the state where the consumer is located, not where the goods are produced, ensuring equity among states. • 💡 Wrong-option analysis: [Option A] CGST: Central GST on intra-state sales, not inter-state; [Option B] SGST: State GST on intra-state sales; [Option D] UTGST: Union Territory GST, equivalent of SGST for Union Territories without legislature.

Correct Answer: B. The entire Council of Ministers must resign

• **Acworth Committee (1920–21)** = the committee that recommended separation of railway finances from general government finances in India, a system that lasted until 2017. • **Led by Sir William Acworth** — its recommendation resulted in a separate Railway Budget presented before the General Budget from 1924 until it was merged back in 2017. • 💡 Wrong-option analysis: [Option A] Hilton Young Commission: recommended central banking reforms leading to RBI; [Option B] Simon Commission: reviewed constitutional reforms, not railway finances; [Option D] Wanchoo Committee: dealt with direct tax reforms, not railways.

Correct Answer: A. Economic Survey

• **Railway Budget merged with Union Budget** = from 2017–18 onward, the Railway Budget was merged with the General Union Budget, ending a 92-year practice of presenting them separately. • **Effective from 2017** — the merger was recommended by the Bibek Debroy Committee; it simplified the budget process and ended the convention of a separate Railway Minister's speech. • 💡 Wrong-option analysis: [Option A] 2014: incorrect year; merger happened in 2017; [Option B] 2015: budget reform discussions started but merger was announced in 2016 for 2017; [Option D] 2019: the merger had already happened two years earlier.

Correct Answer: A. Dividends from RBI

• **Budget presentation date changed to 1 February** = from 2017 onward, the Union Budget is presented on 1 February instead of the last working day of February, allowing earlier implementation of schemes. • **Advance by one month** — the earlier date ensures budget proposals become law before the financial year begins on 1 April, giving full-year implementation time. • 💡 Wrong-option analysis: [Option A] 1 March: the budget was never officially fixed at 1 March; [Option B] 1 January: too early; budget-related parliamentary processes need lead time from November/December; [Option D] 28 February: this was the old date used until 2016.

Correct Answer: A. 101st Amendment

• **Plan and Non-Plan expenditure classification** = the old budget system where expenditures were divided into Plan (five-year plan-linked) and Non-Plan (routine) categories, abolished from 2017–18. • **Replaced by Capital vs Revenue** — the new classification introduced from 2017–18 divides spending into capital expenditure (asset-creating) and revenue expenditure (consumption), which is more meaningful. • 💡 Wrong-option analysis: [Option A] Direct vs Indirect: a tax classification, not expenditure; [Option B] Centre vs States: describes intergovernmental transfers, not budget expenditure heads; [Option D] Voted vs Charged: describes how Parliament approves expenditure, not the plan/non-plan distinction.

Correct Answer: A. Little bag

• **Charged Expenditure** = expenditure that is charged on the Consolidated Fund of India and is not subject to a vote in Parliament — it is non-votable. • **Includes salary of President, judges** — salaries of the President, Speaker, CAG, judges of Supreme Court and High Courts, and debt servicing are charged items. • 💡 Wrong-option analysis: [Option A] Voted Expenditure: requires Parliament's approval through the budget; [Option B] Plan Expenditure: an older classification for development spending, now abolished; [Option D] Revenue Expenditure: a broader category that includes both charged and voted items.

Correct Answer: C. Madhya Pradesh

• **Supplementary Demands for Grants** = additional budget requests made by the government during the year when the original budget allocation is insufficient. • **Presented under Article 115** — Parliament must approve these additional grants; they are needed when unforeseen expenditure arises after the budget is passed. • 💡 Wrong-option analysis: [Option A] Vote on Account: a temporary grant before the main budget, not a mid-year supplement; [Option B] Excess Grants: sought after expenditure has already exceeded the grant, requiring post-fact approval; [Option D] Token Demands: symbolic demands of ₹1 to draw attention to a new policy, a subset of Supplementary Demands.