Indian Economy GK Questions with Answers – Page 49

Gross National Product minus depreciation gives Net National Product. Depreciation is the wear and tear of machinery, buildings and other capital goods during the year.

The product method adds up the value of goods and services produced by all firms in the economy. National income can be measured in three ways, and all three should give the same figure.

The National Bank for Agriculture and Rural Development was set up on 12 July 1982.

Fiscal policy means the use of taxation, public expenditure and public borrowing to influence output, employment and prices, and all three instruments belong to the government and are given effect through the Union Budget.

It empowers the Lok Sabha to make a grant in advance, pending the completion of the procedure prescribed for voting the demands for grants and the passing of the Appropriation Act.

A policy cut motion asks that the amount of a demand be reduced to one rupee. The reduction is symbolic; the purpose is to record complete disapproval of the policy underlying the demand, and the member moving it may advocate an alternative policy.

The Fiscal Responsibility and Budget Management Act was passed by Parliament in 2003 and its rules were brought into force in 2004.

Primary deficit equals fiscal deficit minus interest payments. Interest is the cost of borrowings made in earlier years, so removing it leaves the borrowing that the present year's policies alone make necessary.

Fiscal deficit is total expenditure minus total receipts other than borrowings, which means it measures exactly how much the government must borrow during the year to meet its planned spending.

The Constitution nowhere uses the word budget. Article 112 requires the President to cause to be laid before both Houses of Parliament, in respect of every financial year, a statement of the estimated receipts and expenditure of the Government of India, and this statement is called the Annual Financial Statement.

The Union Budget 2021-22 proposed raising the corpus of the Contingency Fund of India from five hundred crore rupees to thirty thousand crore rupees, and the change was carried through the Finance Bill of that year.

The budget estimate for the fiscal deficit of the central government in 2021-22 was placed at 6.8 per cent of gross domestic product.

It was the first union budget in India not to be printed.

A receipt is capital if it either creates a liability for the government or reduces an asset it holds.

Nominal GDP is measured at current prices and real GDP at the prices of a base year, so the ratio between them isolates the effect of the change in prices.

The real rate of interest is the nominal rate less the rate of inflation, an approximation known as the Fisher equation.

The wholesale price index is built entirely from the prices of goods traded in bulk, and it has exactly three major groups: primary articles, fuel and power, and manufactured products, of which manufactured products carry the largest weight.

The Monetary Policy Committee set up under the amended Reserve Bank of India Act has six members.

If the inflation rate falls from seven per cent to five per cent, prices are still higher than last year but they are rising more slowly.

A loan is repaid in a fixed number of rupees, and inflation reduces what those rupees can buy. The borrower therefore returns money of smaller real value than the money received, so the real burden of the debt falls.