Economy Chapters

1. Economy and Economics2. Characteristics of Indian Economy3. Agriculture and Land Development4. National Income5. Planning6. Unemployment7. Trade and Commerce8. New Economic Policy9. Indian Financial System10. Indian Fiscal System11. Banking in India12. Tax System13. Industry14. Foreign Trade15. Glossary of Economic and Financial Terms16. Some Noteworthy Facts17. Socio Economic and Caste Census 2011

Indian Fiscal System

The Indian Fiscal System deals with the government’s revenue, expenditure, and borrowing policies to influence the economy.

Definition

The Indian Fiscal System refers to the management of government finances through taxation, spending, and debt operations to achieve economic objectives.

Components of Fiscal System

  • Government Revenue: Tax revenue (direct and indirect taxes) and non-tax revenue.
  • Government Expenditure: Developmental and non-developmental spending.
  • Public Debt: Internal and external borrowings.
  • Fiscal Deficit: Difference between total expenditure and total revenue.
  • Budget: Annual statement of government’s fiscal plans.

Functions of Fiscal System

  • Resource mobilization through taxation.
  • Redistribution of income to reduce inequality.
  • Economic stabilization via fiscal policies.
  • Provision of public goods and services.
  • Promoting economic growth and development.

Previous Year Questions

  • SSC CGL 2020: What is fiscal deficit?
  • The excess of total government expenditure over total revenue.
  • HSSC 2021: Name two sources of government revenue.
  • Tax revenue and non-tax revenue.
  • RRB JE 2019: What is public debt?
  • Borrowings by the government from internal and external sources.
  • SSC CHSL 2021: Define budget in fiscal terms.
  • Annual statement showing government’s estimated revenue and expenditure.
  • HSSC 2020: What are direct taxes? Give an example.
  • Taxes levied directly on income or wealth, e.g., Income Tax.
  • SSC MTS 2020: What are indirect taxes? Give an example.
  • Taxes levied on goods and services, e.g., GST.
  • RRB NTPC 2021: What is meant by revenue deficit?
  • The excess of revenue expenditure over revenue receipts.
  • SSC GD 2019: Name a major component of government expenditure.
  • Developmental expenditure (e.g., infrastructure).
  • HSSC 2019: What role does fiscal policy play?
  • Regulates economy through government spending and taxation.
  • SSC CGL 2021: What is the difference between fiscal deficit and revenue deficit?
  • Fiscal deficit = total expenditure - total revenue; Revenue deficit = revenue expenditure - revenue receipts.
  • RRB JE 2020: What is the purpose of public debt?
  • To finance budget deficits and developmental projects.
  • SSC MTS 2019: Define tax revenue.
  • Revenue collected by the government from taxes.
  • HSSC 2021: What is non-tax revenue? Give an example.
  • Revenue from sources other than taxes, e.g., fees and fines.
  • SSC CHSL 2020: What is meant by deficit financing?
  • Raising funds by borrowing to cover fiscal deficit.
  • RRB NTPC 2019: What is the impact of high fiscal deficit?
  • May cause inflation and increase government borrowing costs.
  • SSC GD 2021: What is the role of the Finance Commission?
  • Allocates financial resources between the central and state governments.
  • HSSC 2020: What is a balanced budget?
  • When government revenue equals expenditure.
  • SSC CGL 2019: Explain the term “tax buoyancy.”
  • Responsiveness of tax revenue to changes in income or GDP.
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