Insights Static Quiz -73, 2018 –Economics

Answer – d

• Eastern DFC (1839 route kilometres [RKM]) extends from Dankuni near Kolkata toLudhiana in Punjab, while the Western DFC (1499 RKM) extends from the Jawahar LalNehru Port (JNPT) in Mumbai to Dadri /Rewari near Delhi.
• A special purpose vehicle, the Dedicated Freight Corridor Corporation of India Limitedhas been set up to implement the project.

Source – Chapter 9, Ramesh Singh

Answer – c

• The part of the fiscal deficit which was provided by the RBI to the government in a particular year isMonetised Deficit, this is a new term adopted since 1997–98 in India. It evaluates the quantum of market borrowings the government has acquired in respect of its revenue
• Every year both central and state governments in India had been dependingheavily on market borrowings (internal) for its long-term capital requirements. Market borrowings ofthe government are done and managed by the RBI

Source – Chapter 18, Ramesh Singh

Answer – d

• Basically, thegovernments face the problem of managing as much funds, money, capital as isrequired by it for public expenditure. Such expenditure might be of revenue kind or capital kind. The apparent deficit is sometimes termed as capital deficit, though the term does not come in the nomenclature of public finance theoretically. Suchdifficulties have always been with the developing economies due to their high level requirement ofcapital expenditures.
• The fiscal deficit excluding the interest liabilities for a year is the primary deficit, a term India startedusing since the fiscal 1997–98.It shows the fiscal deficit for the year in which the economy had notto fulfill any interest payments on the different loans and liabilities which it is obliged to—shownboth in quantitative and percentage of GDP forms

Source – Chapter 18, Ramesh Singh

Answer – c

• Every form of money generation in the nature of income, earnings are revenue for a firm or agovernment which do not increase financial liabilities of the government—i.e., the tax incomes, nontax incomes along with foreign grants. All of the above except 4 is a form of revenue. 4 is non-revenue as it is a liability
• Non-tax Revenue Receipts includes all money earned by the government from sources other taxes. They are
• Profits and dividends which the government gets from its public sector undertakings (PSUs).
• Interests recieved by the government out of all loans forwarded by it, be it inside the country(i.e., internal lending) or outside the country (i.e., external lending). It means this incomemight be in both domestic and foreign currencies.
• Fiscal services also generate incomes for the government, i.e., currency printing, stampprinting, coinage and medals minting, etc.
• General Services also earn money for the government as the power distribution, irrigation,banking, insurance, community services, etc.
• Fees, Penalties and Fines received by the government.
• Grants which the governments receives—it is always external in the case of the centralgovernment and internal in the case of state governments.

Source – Chapter 18, Ramesh Singh

Answer – d

All the expenditures incurred by the government are either of revenue kind or current kind or compulsive kind. The basic identity of such expenditures is that they are of consumptive kind and do not involve creation of productive assets. They are either used in running of a productive process or running a government. A broad category of things that fall under such expenditures in India—
(i) Interest payment by the government on the internal and external loans;
(ii) Salaries, Pension and Provident Fund paid by the government to the government employees;
(iii) Subsidies forwarded to all sectors by the government;
(iv) Defence expenditures by the government;
(v) Postal Deficits of the government;
(vi) Law and order expenditures (i.e., police & paramilitary);
(vii) Expenditures on social services (includes all social sector expenditures as education, health care, social security, poverty alleviation, etc.) and general services (tax collection, etc.);
(viii)Grants given by the government to Indian states and foreign countries.

Source – Chapter 18, Ramesh Singh