Public Finance And Budget
I Points to Remember
- When the expenditure is more than the income it leads to debt
- personal Finance deals with income expenditure and debt management of an individual.
- The finance managed by the government is called public finance.
- In India the financial year starts from April 1st and ends on 31st March of the successive year.
- In India the central budget is prepared by the finance minister.
- Normally the finance minister presents the central budget in the lok Sabha in February or March .
- If both income and expenditure are the same it is called Balanced budget.
- The government collects income from varied sources for its expenditure . The is called public Revenue.
- The income generated by the government through taxes and other sources is called Revenue receipts.
- The Money paid by the citizens without any expectation in return is called Tax.
I Choose the Correct answer from the following alternatives:
1. When does the financial year in India Start?
a)from April 1st b)from March 31st
c)from June 22nd d)December 25th
2. If the expenditure is more than the income it is called ?
a)Balanced Budget b)Surplus Budget c)Deficit Budget d)None of the above
3. ------Presents the Central Budget in the Lok Sabha in February or March ?
a)The Finance Minister b)The President c)The prime Minister d)The Chief Justice
4. The expenditure incurred by the government in the interest of public is called?
a)Budget b)Income c)Revenue Expenditure d)Public Expenditure
5. The expenditure incurred by the central government from the sources of revenue is called
a)Revenue Expenditure b)Public Expenditure
c)Capital Expenditure d)Planned Expenditure
6. The expenditure incurred on long term developmental projects in agriculture industry transport etc is called ?
a)Non planned Expenditure b)Planned capital Expenditure
c)Capital Income d)Capital Expenditure
7. The income generated by the government through taxes and other sources is called
a)Tax b)Public Revenue c)Direct Tax d)Revenue Receipts
8. The money paid by the citizens without any expectation in return is called
a)Direct Tax b)Tax c)Indirect Tax d)None of the above
9. when the Tax is paid by an individual on whom it is imposed it is called
a)Capital income b)Expenditure c)Planned Expenditure d)Direct Tax
10. If the burden of tax imposed by the government is transferable to others it is called
a)Indirect Tax b)Tax c)Revenue Receipts d)Direct Tax
III Fill in the blanks with suitable words
1 The Government manages the public finance through Fiscal policy .
2. In the budget when the government‟s revenue is more than its expenditure it is
called Surplus Budget .
3. The person who presents the central government Budget in the Lok Sabha is Finance Minister.
4. Capital Revenue is the revenue generated by the government through internal and external loans.
5. Public Finance mans the finances of the government.
6. Budget is a document showing the income and expenditure of the government
7. If the expenditure and income are same it is called Balanced Budget
8. The money paid by the citizens without any expectation in return is called Tax.
9. When the tax is paid by an individual on whom it is imposed it is called Direct Tax.
10. If the burden of tax imposed by the government is transferable to others it is called Indirect Tax.
IV Match the following
1. Direct Tax a)Financial Expenditure c
2. Indirect Tax b)Non planned expenditure d
3. Internal Debt c)Income Tax e
4. Interest Payment d)Central Excise Tax b
V Answer the following in one sentence each
1. What is meant by Public Finance?
Public finance means the finances of the government
2. What do you mean by „Budget‟?
The statement of estimated income and expenditure of a year prepared by the government is called Budget.
3. Give the meaning of „Deficit Budget‟.
If the expenditure is more than the income it is called deficit Budget
4. What are „Direct Taxes‟?
When the tax is paid by an individual on whom it is imposed , it is called Direct Tax
5. Express fiscal deficit in the form of a formula.
Fiscal deficit = (Revenue +Non-Loan Capital Revenue) Total Expenditure.
III. Answer the following in five-six sentences each :
1. Explain the differences between personal finance and public finance.
2. Explain briefly the significance of public finance.
Public finance studies the way the government manages its income , expenditure anddebts. Public finance gives a complete picture of the governments income, expenditure and debt management . The government manages public finance according to fiscal policy.
3. List the planned expenditure of the Central Government.
Under the Central Planned Expenditure, the government spends money on three types of services and development. They are:
1. Financial services – Agriculture and agriculture-related activities, industry, communication, fuel, science and technology, rural development etc.
2. Social services – Education, health, hygiene, family welfare,drinking water supply, housing, social welfare etc.
3. General services – The expenditure incurred on maintenance of peace, law and order.
4. Explain the aspects of non-tax revenue of the Central government.
- The net profit generated by the Indian Railways.
- The revenue generated by the Departments of Post and Telecommunications.
- The revenue generated by the Public Sector Industries.
- The revenue generated by the Coins and Mints.
- Various types of fees and penalties etc.
Above mentioned are the aspects of non tax revenue of the central government.
5. What is fiscal deficit? Mention the four kinds of fiscal deficit.
In revenue if the governments expenditure is more than its tax revenue and non loan capital revenue it is called fiscal deficit. Four kinds of fiscal deficit are
a)Revenue Deficit b)Tax deficit c)Fiscal Deficit d)Primary Deficit
6. What is called principle of progressive Taxation?
The government imposes higher rate of taxes on high-income group and lower rate of taxes on low-income group. The poor are exempted from income tax. Similarly, a higher rate of taxes is imposed on luxury goods and services used by the rich, and a lower rate of taxes on goods and services used by the common people. This principle used by the government in the imposition of taxes is called Principle of Progressive Taxation.
7. Explain the difference between Direct Tax and Indirect Tax.
8. What is called disinvestment?
The government generates capital revenue through other sources too. It withdraws its investment in public industries. This is called disinvestment.
9. What is called foreign debt?
The loan obtained fromcitizens of the country, banks, financial institutions and industries is called internal debt. The loan obtained from foreign governments, foreign financial institutions and international financial institutions is called foreign debt.
10. What is deficit financing? What its Results ?
In the budget, if the government‟s expenditure is more than its revenue receipts and non-debt capital receipts, it is called fiscal deficit. the developmental activities in the country increase and the amount of money in circulation increases. Due to this, the purchasing power of the people improves. Deficit is indicated by the nagetive sign (-).
VI Additional questions
1. How is the central budget in india prepared?
In India, the Central budget is prepared by the finance minister in consultation with the finance department. Normally, the finance minister presents the Central budget in the Lok Sabha in February or March. In both the Houses of the arliament, there will be detailed debate on the budget and the in the houses of the parliament eventually the government has to obtain the approval of both the Houses before March 31st
2. What is Revenue Expenditure ?
The expenditure incurred by the central government from the sources of revenue income is called revenue expenditure .
3. Define Non – Planned Expenditure
The expenditure incurred by the government on paying compensation to people affected by the developmental activities is called non planned expenditure .
4. What is Public Revenue ?
The government collects income from varied sources for its expenditure this is called public revenue .
5. What is meant by Nan –Tax Revenue?
Apart from taxes the government generates revenue from other sources This is called Non –tax revenue.