Agreement on the Development of Essential Consumer Goods.<\/li><\/ol>\n\n\n\nWhich of the agreements given above was\/were concluded between the Bombay Plan Club and the National Planning Committee?
(a) 1 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3<\/p>\n\n\n\n
Answer – D<\/p>\n\n\n\n
Option (d) is correct:<\/strong><\/p>\n\n\n\n- The National Planning Committee (NPC), chaired by J. L. Nehru, was established in October 1938 on the suggestion of INC president Subhash C. Bose to devise comprehensive development plans embracing all main economic sectors. The Bombay Plan, properly titled “A Plan of Economic Development for India,” was initiated by eight Indian capitalists. The first volume of this plan was released in 1944, and the second volume was issued in 1945. Popular feelings about the need of planning and the crisscrossing of memberships between the NPC and the Bombay Plan Club enabled some clear agreements between these two major plans.<\/li>
- A basic agreement on the topic of agrarian restructuring, including the elimination of all middlemen (zamindari abolition), minimum salaries, a guarantee of minimum or fair pricing for agricultural products, cooperatives, credit, and marketing help.<\/li>
- Rapid industrialization agreement in which both strategies agreed on a focus on heavy capital goods and fundamental industries (the Bombay Plan had allocated 35 percent of its total plan outlay on basic industries).<\/li>
- Taking cues from Soviet planning, both the NPC and the Bombay Plan advocated for the development of critical consumer goods industries at the same time, although in a low-key manner.<\/li><\/ul>\n\n\n\n
<\/span>Q22. Consider the following statements regarding different Types of Expenditure incurred by the Government of India:<\/span><\/h3>\n\n\n\n- All asset creating, and productive expenditures are Non-Planned
Expenditure.<\/li> - All consumptive, non-productive, nonasset building expenditures are Planned Expenditures.<\/li>
- The government switched over from the ‘Plan’ and ‘Non-Plan’ classification of expenditure to ‘Revenue’ and ‘Capital’ in the fiscal 2017-18.<\/li><\/ol>\n\n\n\n
Which of the statements given above is\/are correct?
(a) 1 and 2 only
(b) 3 only
(c) 2 and 3 only
(d) 1, 2 and 3<\/p>\n\n\n\n
Answer- B<\/p>\n\n\n\n
- Statements 1 and 2 are not correct: <\/strong>The Plan and the Non-Plan are two categories of classification of every expenditure incurred on the public exchequer. In India, the plan expenditures are all those expenditures which are done in the name of planning and all others are non-plan expenditures. Essentially, the Planned expenditures are all asset creating, and productive expenditures and Non-Plan Expenditures are all consumptive, non-productive and non-asset building expenditures. These are also termed as Developmental and Non-developmental expenditures, respectively.<\/li>
- Statement 3 is correct: <\/strong>In September 2011, Dr. C. Rangarajan (former Chairman of Prime Minister’s Economic Advisory Council) headed a high-power panel which recommended redefining Plan and Non-Plan expenditures as Capital and Revenue expenditures. This was recommended because the former set of terms ‘blur the classification’. The panel implied that this would facilitate linking expenditure to ‘outcomes’, and better public expenditure. Looking at this anomaly, since the fiscal 2017-18, the Government switched over from the ‘Plan’ and ‘Non-Plan’ classification of expenditure to ‘Revenue’ and ‘Capital’ (It was announced in the Union Budget 2017-18).<\/li><\/ul>\n\n\n\n
<\/span>Q23. Which of the following Expenditures come under the category of Revenue Expenditure of the Government in India?<\/span><\/h3>\n\n\n\n- Loan Repayments by the Government<\/li>
- Salaries, Pension and Provident Fund paid by the Government to the Government employees<\/li>
- Subsidies forwarded to all sectors by the Government<\/li>
- Expenditures on Social services<\/li><\/ol>\n\n\n\n
Select the correct answer using the code given below:
(a) 2 and 4 only
(b) 2, 3 and 4 only
(c) 1 and 3 only
(d) 1, 2 and 3 only<\/p>\n\n\n\n
Answer-B<\/p>\n\n\n\n
- All expenditures incurred by the Government are either of the Revenue kind or Current kind or Compulsive kind. The basic identity of such expenditures is that they are of consumptive kind and productive assets are not created. They are either used in running a productive process or running a Government. In India a wide category of things comes under such expenditures like:<\/li>
- The Government’s Interest payment (not loan repayment) on the internal and external loans. (Option 1 is not correct)<\/li>
- Salaries, Pension, and Provident Fund paid by the Government to the Government employees. (Option 2 is correct)<\/li>
- Subsidies are forwarded to all sectors by the Government. (Option 3 is correct)<\/li>
- Defense expenditures by the Government.<\/li>
- Postal Deficits of the Government.<\/li>
- Law and order expenditures (i.e., police & paramilitary).<\/li>
- Expenditures on Social services (includes all social sector expenditures such as education, health care, social security, poverty alleviation, etc.) and general services (tax collection, etc.). (Option 4 is correct)<\/li>
- Grants given by the Government to Indian states and foreign countries.<\/li><\/ul>\n\n\n\n
<\/span>Q24. Which of the following Expenditures come under the category of Capital Expenditure of the Government in India?<\/span><\/h3>\n\n\n\n- Loan Disbursals by the Government<\/li>
- Loan Repayments by the Government<\/li>
- Plan Expenditure of the Government<\/li>
- Capital Expenditures on Defence by the Government<\/li><\/ol>\n\n\n\n
Select the correct answer using the code given below:
(a) 2 and 4 only
(b) 2, 3 and 4 only
(c) 1 and 3 only
(d) 1, 2, 3 and 4<\/p>\n\n\n\n
Answer – D<\/p>\n\n\n\n
- The Capital Expenditure includes all the areas which gets Capital from the Government. In India, it comprises:<\/li>
- Loan Disbursals by the Government:<\/strong> The loans forwarded by the Government might be internal (i.e., to the States, UTs, PSUs, FIs, etc.) or external (i.e., to foreign countries, foreign banks, purchase of foreign bonds, loans to IMF and WB, etc.). (Option 1 is correct)<\/li>
- Loan Repayments by the Government:<\/strong> Loan payments might be internal as well as external. This involves only the capital part of the loan repayment as the element of interest on loans is shown as a part of the Revenue expenditure. (Option 2 is correct)<\/li>
- Plan Expenditure of the Government: <\/strong>This includes all the expenditures incurred by the Government to finance the planned development of India as well as the Central Government’s financial support to the States for their plan requirements. (Option 3 is correct)<\/li>
- Capital Expenditures on Defence by the Government: <\/strong>It includes all kinds of Capital expenses to maintain the Defence forces, the equipment purchased for them as well as the modernization expenditures. It should be kept in mind that defense is a Non-plan expenditure that has capital as well as Revenue expenditures in its maintenance. The Revenue part of expenditure in the Defence is counted in the Revenue expenditures by the Government. (Option 4 is correct)<\/li>
- Other Liabilities of the Government: <\/strong>Basically, this consists of all the Repayment liabilities of the Government on the items of the other Receipts. The level of liabilities depends on the fact as to how much such receipts were made by the Governments in the past.<\/li><\/ul>\n\n\n\n
<\/span>Q25. With reference to the ‘Effective Revenue Deficit’ calculated in India, consider the following statements:<\/span><\/h3>\n\n\n\n- Effective Revenue Deficit is the difference between Revenue Deficit and Grants for the creation of Capital Assets (GoCA).<\/li>
- The Grants for Creation of Capital Assets (GoCA) include the Government of India Grants forwarded to the States & Union Territories for the implementation of the Centrally Sponsored Programmes.<\/li><\/ol>\n\n\n\n
Which of the statements given above is\/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2<\/p>\n\n\n\n
Answer – C<\/p>\n\n\n\n
- Statement 1 is correct: <\/strong>The difference between Revenue Deficit and Grants for the creation of Capital Assets is called Effective Revenue Deficit. The Rangarajan Committee on Public Expenditure suggested the Effective Revenue Deficit concept. Its objective is to remove the money used out of borrowing to finance Capital expenditure. The concept was brought in to determine the actual deficit in the Revenue account after adjusting for expenditure of capital nature. The consumption component of the Revenue deficit will reduce with increased concentration on this. It will establish space for increased Capital spending. The Union Budget 2011-12 introduced this.<\/li>
- Statement 2 is correct: <\/strong>The Grants for creation of Capital Assets (GoCA) includes the Government of India Grants forwarded to the States & Union Territories for the implementation of the Centrally Sponsored Programmes such as Accelerated Irrigation Benefit Programme, Pradhan Mantri Gram Sadak Yojana, Jawaharlal Nehru National Urban Renewal Mission, etc. Though the Government of India shows these expenses in its Revenue Expenditures, they are involved with creation of assets and cannot be considered completely ‘unproductive’ like other items put in the basket of the Revenue Expenditures.<\/li><\/ul>\n\n\n\n