Budget Practice Questions
20 free Budget practice questions for the Static GK. Tap an option to answer — you get instant feedback, the correct answer, and a detailed explanation for every question.
Which Article of the Indian Constitution requires the President to present the 'Annual Financial Statement' before both Houses of Parliament?
- A Article 110
- B Article 112
- C Article 114
- D Article 265
Correct answer: Article 112
Article 112 of the Indian Constitution mandates the presentation of the Annual Financial Statement, popularly known as the Union Budget. It outlines the estimated receipts and expenditures of the Government of India for a specific financial year.
The term 'Vote on Account' is used in the context of the Union Budget to signify:
- A A vote on the entire budget at the end of the session
- B A grant to cover government spending before the budget is passed
- C A special reserve fund allocated for the Prime Minister's office
- D The process of auditing the previous year's expenditure
Correct answer: A grant to cover government spending before the budget is passed
A Vote on Account is a grant in advance to enable the government to carry on until the voting of demands for grants and the passing of the Appropriation Bill. It typically covers the expenditure for the first two months of the new financial year.
Which of the following is NOT a part of the Revenue Receipts of the Government of India?
- A Tax revenue from GST
- B Interest receipts on loans given by the government
- C Dividends and profits from Public Sector Undertakings
- D Recovery of loans given by the government
Correct answer: Recovery of loans given by the government
Recovery of loans is considered a Capital Receipt because it reduces the assets of the government. Revenue receipts consist of tax and non-tax revenues that neither create a liability nor cause a reduction in assets.
What does the term 'Fiscal Deficit' signify in the Union Budget?
- A Total expenditure minus total receipts excluding borrowings
- B Total expenditure minus tax revenue only
- C The difference between revenue expenditure and revenue receipts
- D The total amount of interest payments made by the government
Correct answer: Total expenditure minus total receipts excluding borrowings
Fiscal Deficit is the difference between the government's total expenditure and its total receipts excluding borrowings. It indicates the total borrowing requirements of the government from all sources.
Which committee recommended the merger of the Railway Budget with the General Budget?
- A Bibek Debroy Committee
- B Vijay Kelkar Committee
- C Urjit Patel Committee
- D Narasimham Committee
Correct answer: Bibek Debroy Committee
Based on the recommendations of the Bibek Debroy Committee, the 92-year-old practice of presenting a separate Railway Budget was scrapped. Since 2017-18, the Railway Budget has been merged into the Union Budget.
The 'Primary Deficit' in the Indian Budget is calculated by subtracting which of the following from the Fiscal Deficit?
- A Subsidies
- B Interest payments
- C Capital expenditure
- D Defense expenditure
Correct answer: Interest payments
Primary Deficit is defined as the Fiscal Deficit minus interest payments on previous borrowings. it shows the borrowing requirements of the government exclusive of interest liabilities.
Which document presented along with the Budget is mandated by the Fiscal Responsibility and Budget Management (FRBM) Act, 2003?
- A The Economic Survey of India
- B The Appropriation Bill of Parliament
- C Medium-Term Fiscal Policy Statement
- D The Outcome Budget Statement
Correct answer: Medium-Term Fiscal Policy Statement
Under the FRBM Act, the government must lay three statements before Parliament: the Medium-Term Fiscal Policy Statement, the Fiscal Policy Strategy Statement, and the Macroeconomic Framework Statement. These ensure transparency and fiscal discipline.
Effective Revenue Deficit (ERD) is a concept introduced in the Union Budget to exclude which of the following from the Revenue Deficit?
- A Grants for creation of capital assets
- B Interest payments to states
- C Salaries and pensions of government employees
- D Subsidies on food and fertilizers
Correct answer: Grants for creation of capital assets
Effective Revenue Deficit is the difference between Revenue Deficit and 'Grants for creation of capital assets'. It was introduced to reflect that some revenue expenditure actually goes into creating productive assets for the economy.
In the context of the Budget, 'Capital Expenditure' includes which of the following?
- A Payment of salaries to government staff
- B Subsidies provided to farmers
- C Construction of highways and bridges
- D Interest payments on public debt
Correct answer: Construction of highways and bridges
Capital expenditure is the money spent by the government on the development of machinery, equipment, building, or health facilities. It either creates an asset for the government or reduces a liability.
Which of the following bodies prepares the Union Budget of India?
- A The Department of Revenue
- B Department of Economic Affairs
- C The NITI Aayog
- D The Finance Commission of India
Correct answer: Department of Economic Affairs
The Budget Division of the Department of Economic Affairs (Ministry of Finance) is the nodal body responsible for preparing the Union Budget. It coordinates with various ministries and stakeholders to finalize the estimates.
The 'Consolidated Fund of India' is defined under which Article of the Constitution?
- A Article 265
- B Article 267
- C Article 280
- D Article 266
Correct answer: Article 266
Article 266(1) provides for the Consolidated Fund of India, where all revenues received by the government, loans raised, and recoveries of loans are credited. No money can be withdrawn from this fund without parliamentary authorization.
Which bill gives the government the legal authority to withdraw funds from the Consolidated Fund of India?
- A The Finance Bill
- B The Money Bill
- C The Contingency Bill
- D Appropriation Bill
Correct answer: Appropriation Bill
The Appropriation Bill is introduced in the Lok Sabha to authorize the government to withdraw funds from the Consolidated Fund of India to meet expenditures. It is passed after the voting on demands for grants is completed.
The 'Finance Bill' primarily deals with which aspect of the Budget?
- A Authorization of expenditure
- B Loans taken from the World Bank
- C Grants-in-aid provided to the states
- D Proposals for new or changed taxes
Correct answer: Proposals for new or changed taxes
The Finance Bill is submitted to Parliament every year to give effect to the tax proposals of the government. It is a requirement under Article 265, which states that no tax shall be levied or collected except by authority of law.
The 'Contingency Fund of India' is placed at the disposal of which authority?
- A The Finance Minister
- B The Prime Minister
- C The President of India
- D The Comptroller and Auditor General
Correct answer: The President of India
Article 267 establishes the Contingency Fund of India, which is held by the Finance Secretary on behalf of the President. It is used to meet unforeseen and urgent expenditures pending authorization from Parliament.
Which of the following taxes is an example of a Direct Tax in the Union Budget?
- A Goods and Services Tax (GST)
- B Customs Duty
- C Corporation Tax
- D Excise Duty
Correct answer: Corporation Tax
Corporation Tax is a direct tax levied on the net income or profit that corporations make from their businesses. Direct taxes are paid directly by the individual or organization to the government.
What is the correct sequence of the Budget passage in the Parliament?
- A General Discussion, Presentation, Scrutiny by Committees, Voting on Demands
- B Presentation, Voting on Demands, General Discussion, Scrutiny by Committees
- C General Discussion, Voting on Demands, Presentation, Appropriation Bill
- D Presentation, General Discussion, Scrutiny by Committees, Voting on Demands
Correct answer: Presentation, General Discussion, Scrutiny by Committees, Voting on Demands
The standard sequence involves the presentation of the budget, followed by a general discussion. After an adjournment, departmental standing committees scrutinize the demands, followed by voting on demands for grants in the Lok Sabha.
The 'Guillotine' is a parliamentary procedure used during the budget session to:
- A Vote on all remaining demands without discussion
- B Cancel the entire budget
- C Dismiss the Finance Minister
- D Stop discussion and end the Economic Survey debate
Correct answer: Vote on all remaining demands without discussion
On the last day allotted for the voting of demands for grants, the Speaker puts all the remaining demands to vote whether they have been discussed or not. This process is known as the 'Guillotine' and ensures the timely passage of the budget.
Which of the following is considered 'Non-Tax Revenue' for the Union Government?
- A RBI's surplus profit transfer
- B The Securities Transaction Tax
- C The Wealth Tax
- D The Union Excise Duties
Correct answer: RBI's surplus profit transfer
Non-tax revenue includes interest receipts, dividends/profits from PSUs, and the surplus transferred by the RBI. Tax revenue, on the other hand, consists of proceeds from direct and indirect taxes.
Budget 2021-22 introduced the concept of 'Aatmanirbhar Bharat' with a focus on six pillars. Which of the following was NOT one of them?
- A Health and Wellbeing
- B Minimum Government and Maximum Governance
- C Physical and Financial Capital and Infrastructure
- D Universal Basic Income
Correct answer: Universal Basic Income
The six pillars of the 2021-22 Budget were Health and Wellbeing, Physical & Financial Capital and Infrastructure, Inclusive Development, Reinvigorating Human Capital, Innovation and R&D, and Minimum Government and Maximum Governance. Universal Basic Income was not a pillar.
The 'Revenue Expenditure' of the government usually refers to spending that:
- A Leads to the creation of physical assets
- B Reduces the financial liabilities of the government
- C Covers the day-to-day running of the government departments
- D Is only used for repaying the principal amount of outstanding loans
Correct answer: Covers the day-to-day running of the government departments
Revenue expenditure is for the normal running of government departments and various services, interest charges on debt, subsidies, etc. It does not result in the creation of assets for the Government of India.