Theme T134 · Indian Economy

Budgeting & fiscal policy: capital vs revenue, FRBM, tax expenditure, budgets

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What UPSC asks

UPSC asks capital vs revenue budget components, LTCG and DDT changes in 2018, budget objectives, FRBM's rationale and record, and tax expenditure.

Prepare these

• Budget components and deficits
• FRBM Act 2003 and amendments; NK Singh Committee
• Tax expenditure concept
• Budget themes

Answer writing

• Define precisely and illustrate

Directive words in these PYQs: Discuss (2), Explain (1), Distinguish (1), Comment (1), Analyse (1), Critically (1).

Linked themes

Comes back later in

Later themes that take this one further.

Syllabus lines covered

• GS3-L3 — Government Budgeting.

All 5 PYQs, newest first

1. GS32021GS3-ECO-04-M2021-S01

   Distinguish between Capital Budget and Revenue Budget. Explain the components of both these Budgets.

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2. GS32018GS3-ECO-04-M2018-S01

   Comment on the important changes introduced in respect of the Long Term Capital Gains Tax (LTCGT) and Dividend Distribution Tax (DDT) in the Union Budget for 2018-2019.

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3. GS32017GS3-ECO-04-M2017-S01

   One of the intended objectives of Union-Budget 2017-18 is to ‘transform, energize and clean India’. Analyze the measures proposed in the Budget 2017-18 to achieve the objective.

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4. GS32013GS3-ECO-04-M2013-S01

   What were the reasons for the introduction of Fiscal Responsibility and Budget Management (FRBM) Act, 2003? Discuss critically its salient features and their effectiveness.

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5. GS32013GS3-ECO-04-M2013-S02

   What is the meaning of the term ‘tax expenditure’? Taking housing sector as an example, discuss how it influences the budgetary policies of the government.

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