Previous Year UPSC Questions

Explanation

Statement 1 is incorrect: The budget is prepared by the Department of Economic Affairs. The Budget Division under Department of Economic Affairs is responsible for the preparation and submission to Parliament of the Central Governments Budget other than Railways, as well as the supplementary Demands for Grants and Demands for Excess Grants. The Department of Revenue plays a key role in managing In-dia’s financial resources by overseeing tax collection and enforcing economic laws. It is responsible for collecting both direct taxes (such as income tax and wealth tax) and indirect taxes (like GST, customs duty, and excise duty). It does not prepare budget.

Statement 2 is correct: Consolidated Fund of India (Article 266) is a fund to which all receipts are credited and all payments are debited. No money out of this fund can be appropriated (issued or drawn) except in accordance with parliamentary law.

Statement 3 is incorrect: Provident fund deposits, savings bank deposits, remittances etc are credited to the Public Account. The Public Account is operated by the executive action i.e. payment from this account can be made without Parliamentary appropriation.

Explanation

A tax-to-GDP ratio is a gauge of a nation’s tax revenue relative to the size of its economy as measured by gross domestic product (GDP).

Statement 1 is correct: A decrease in the tax-to-GDP ratio may indicate that the government is collecting less tax revenue relative to the size of the economy. This can happen due to slowing economic growth, which reduces corporate profits, incomes, and consumption, leading to lower tax collections. However, this is not always the case, as tax policy changes (like tax cuts) can also reduce the ratio without reflecting economic slowdown.

Statement 2 is incorrect: A decrease in the tax-to-GDP ratio does not necessarily indicate less equitable distribution of na-tional income. While lower tax revenue relative to the size of the economy could result from tax cuts, evasion, or shifts toward in-direct taxes, these factors do not directly determine income in-equality. The impact on equity depends on the structure of the tax system and government policies--if the decline stems from broad-based tax cuts benefiting all income groups, it may not affect income distribution significantly. However, if it results from reduced taxation on the wealthy or increased reliance on regressive indirect taxes, it could exacerbate inequality. Thus, a falling tax-to-GDP ratio alone is not a definitive indicator of less equitable income distribution.

Explanation

Statement 1 is correct: The Forest Carbon Partnership Facility (FCPF) is a global partnership that includes governments, businesses, civil society organizations, and indigenous peoples. It was established to support efforts to reduce emissions from deforestation and forest degradation (REDD+).

Statement 2 is incorrect: The FCPF does not provide financial aid to universities, individual scientists, or institutions for scientific forestry research. Instead, it focuses on providing financial and technical assistance to countries for REDD+ readiness and implementation. The FCPF supports REDD+ efforts through two separate but complementary funds-The FCPF Readiness Fund and The FCPF Carbon Fund.

Statement 3 is correct: The FCPF assists countries in their REDD+ efforts by providing financial and technical assistance. This includes helping countries prepare for REDD+ implementation, develop national strategies, and build capacity for monitoring, reporting, and verification (MRV) of forest carbon emissions.

Explanation

The BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL) is managed by the World Bank. This initiative aims to reduce greenhouse gas emissions from deforestation and forest degradation in developing countries, promoting sustainable land-use practices. It seeks to promote reduced greenhouse gas emissions from the land sector, from deforestation and forest degradation in developing countries (REDD+), and from sustainable agriculture, as well as smarter land-use planning, policies and practices.

Explanation

Statement 1 is incorrect: As per Article 171, the maximum strength of the Legislative Council of the state cannot be more than one third of total strength of assembly. However, the size of the Legislative Council cannot be less than 40 members. The constitution has fixed the maximum and minimum limits but actual strength is fixed by Parliament.

Statement 2 is incorrect: The members of the Legislative Council are indirectly elected. The Chairman of the Legislative Council is elected by the members from amongst itself.

Explanation

Statement 1 is incorrect: The first woman President of the Indian National Congress was Annie Besant in the 1917 Calcutta Session. Sarojini Naidu became the first Indian woman President of INC in 1925 Kanpur Session.

Statement 2 is correct: Badruddin Tyabji (1844-1906) was the first Muslim President of the Indian National Congress. He presided over the third session of the INC in 1887 (Madras Session). He was a progressive leader, reformist, and the first Indian to practice law in the Bombay High Court.

Explanation

Statements 1 and 3 are correct: The main idea behind the Panchayati Raj Institutions (PRIs) is to promote grass root democracy and development. The main aim is to evolve a system of democratic decentralisation and people’s participation with a view to ensure rapid socio-economic progress and provide adequate justice.

Statement 2 is incorrect: Political accountability can be achieved in any system with democratic rule and thus not the fundamental objective of PRIs.

Statement 4 is incorrect: Financial mobilisation was never the fundamental basis for the establishment of PRI.

Explanation

The mentioned agreements and terms are related to global trade regulations under the World Trade Organization (WTO):

Agreement on Agriculture (AoA) is a WTO agreement that sets international rules for agricultural trade, subsidies, and market access. It aims to reduce trade barriers and promote fair competition in agriculture. Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures: It establishes rules for food safety and animal and plant health standards in global trade. It ensures that countries do not use health measures as a disguised trade barrier. Peace Clause: It was introduced under the WTO’s Agreement on Agriculture. It temporarily protected agricultural subsidies from legal challenges under WTO rules. It was a major issue in India’s food security concerns at WTO negotiations.

Explanation

Statement 1 is incorrect: The rate of growth of Real Gross Domestic Product (GDP) in India has not steadily increased over the last decade (2005-2015). Instead, it has experienced fluctuations due to various factors such as global economic conditions, domestic policy changes, and structural reforms. For example: India experienced high GDP growth rates during the mid-2000s (around 9% in 2007-2008). The growth rate declined significantly during the global financial crisis of 2008-2009. Post-2010, growth rates recovered but remained volatile, with a slowdown in recent years due to factors like demonetization (2016) and the introduction of the Goods and Services Tax (GST) in 2017.

Statement 2 is correct: Gross domestic product at market prices is the sum of added values of all activities which produce goods and services, plus taxes and minus subsidies on products. When measured in nominal terms (i.e., at current market prices without adjusting for inflation), India’s GDP in rupees has shown a consistent upward trend over the past decade. This steady increase reflects the overall expansion of the economy in nominal terms.

Explanation

Statement 1 is correct: Budget deficit is used to define a status of financial health in which expenditures exceed revenue. Revenue Expenditure is the part of government spending that does not result in the production of assets such as Salaries, wages, pensions, subsidies, and interest payments etc. Reducing Revenue Expenditure involves cutting down on the government’s routine expenses, such as salaries, subsidies, and administrative costs. By streamlining operations and eliminating wasteful spending, the government can lower its revenue expenditure and reduce the budget deficit.

Statement 3 is correct: Rationalizing Subsidies entails reviewing and possibly reducing subsidies that are inefficient or benefit higher-income groups disproportionately. By targeting subsidies more effectively, the government can decrease un-necessary spending, aiding in deficit reduction. Statements 2 and 4 are incorrect:

Introducing New Welfare Schemes without corresponding revenue sources can increase government expenditure, potentially widening the budget deficit. Therefore, this action may not contribute to deficit reduction. Promoting industrial expansion can boost economic growth and over time increase government revenues through higher tax collections. However, the effects of such measures are typically long-term and may not provide immediate relief to a budget deficit.