Budget Basics — Set 6

Correct Answer: D. Article 265

Article 265 provides the fundamental basis for taxation in India. It ensures that the government cannot impose taxes through executive orders alone. Legislative approval via a Finance Bill is mandatory.

Correct Answer: B. Printing new currency to meet the budget gap

Deficit financing occurs when the government borrows from the central bank or prints new money to cover a budget deficit. While it can fund development, it often carries a risk of high inflation. Modern economies generally prefer market borrowing over printing money.

Correct Answer: D. Public Account of India

NSSF belongs to the Public Account of India under Article 266(2). Money in this fund is not government revenue but held in trust for depositors. The government uses these funds as a source of borrowing.

Correct Answer: C. N.K. Singh

N.K. Singh chaired the 15th Finance Commission, which submitted its final report for 2021-26. Its recommendations cover the horizontal and vertical devolution of taxes. It also introduced performance-based incentives for states.

Correct Answer: B. Detailed Demands for Grants

Detailed Demands for Grants (DDG) provide a ministry-wise breakup of planned expenditures. They allow the Parliament to debate and vote on specific funding requirements. They are usually taken up for discussion after the general budget debate.

Correct Answer: B. September 30

Unlike India's March ending, the US federal fiscal year runs from October 1 to September 30. Different countries follow different cycles based on their agricultural or administrative history. Knowledge of these cycles is important for comparing global economic data.

Correct Answer: D. To keep expenditure equal to revenue

A balanced budget means the government does not intend to borrow or save, as spending matches earnings. Classical economists often favored this for long-term stability. However, modern governments rarely achieve this due to welfare and developmental needs.

Correct Answer: C. Nirmala Sitharaman

Nirmala Sitharaman replaced the colonial-era leather briefcase with a red silk 'bahi khata' in 2019. It was described as a departure from the 'colonial hangover'. This traditional ledger style was used before transitioning to the paperless digital budget.

Correct Answer: B. Corporation Tax

Corporation tax is a direct tax on the net income or profit of companies. It is a significant source of revenue for the Indian government. The rates are usually reviewed every year in the Union Budget.

Correct Answer: A. Income Tax

Income tax goes to the Consolidated Fund because it is the government's own revenue. The Public Account holds money where the government acts as a banker or trustee. This money eventually has to be paid back to the public.