Fiscal policy in India is framed and implemented by which authority?
- A.The Reserve Bank of India
- B.The Government of India through the Ministry of Finance
- C.The Securities and Exchange Board of India
- D.The Finance Commission
Correct answer
Explanation
The correct answer is B, the Government of India through the Ministry of Finance. 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. During a slowdown it may spend more or tax less, and when demand is overheating it may do the opposite.
Option A, the Reserve Bank of India, conducts monetary policy through the repo rate, the cash reserve ratio, the statutory liquidity ratio and open market operations; it acts as banker to the government but does not frame the budget. Option C, the Securities and Exchange Board of India, regulates the securities market. Option D, the Finance Commission, is a constitutional body under Article 280 that recommends how central taxes should be shared with the states, which is a distribution question and not fiscal policy itself.
Read the full article: Union Budget and Fiscal Policy: Deficits, Articles and PYQs
Practice Questions
View allWhich of the following items is included in the capital receipts of the Indian Budget?
- A.Commercial revenue
- B.Interest received
- C.Issuance of treasury bills
- D.Dividends and profits
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A receipt is capital if it either creates a liability for the government or reduces an asset it holds.
Read the full explanation →Which of the following is India's first Paperless Budget?
- A.Union Budget 2021-22
- B.Union Budget 2019-20
- C.Union Budget 2020-21
- D.Union Budget 2018-19
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It was the first union budget in India not to be printed.
Read the full explanation →As per Union Budget 2021-22, Fiscal deficit is estimated at ______ per cent of GDP in 2021-22.
- A.5.1
- B.7.6
- C.6.8
- D.7.2
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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.
Read the full explanation →The Contingency Fund of India is to be augmented from Rs. 500 crores to _________ crores through the Finance Bill as per the Union Budget 2021-22.
- A.Rs. 15,000
- B.Rs. 30,000
- C.Rs. 25,000
- D.Rs. 10,000
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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.
Read the full explanation →Under which article of the Constitution is the Union Budget presented as the Annual Financial Statement?
- A.Article 110
- B.Article 112
- C.Article 114
- D.Article 123
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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.
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