Macro Overview of Rajasthan Economy and State Budget: RAS Prelims MCQs
76 RAS Prelims MCQs on the macro overview of the Rajasthan economy and its State budget cover the size of the economy, regional divides, the budget structure, the FRBM Act and public debt. Revenue and fiscal deficit, State Development Loans, guarantees, the State Finance Commission and the structural problems of the State are asked as definitions and statements.
Practice questions based on the RPSC RAS Prelims syllabus. They follow the exam pattern but are not past-paper questions.
Showing 31–40 of 76 questions
RAS PrelimsRajasthan Economy · Macro Overview of Rajasthan Economy and State Budget
Q31. Read the following statements concerning State Excise duty in Rajasthan: I. It is levied on alcoholic liquors for human consumption. II. It is also levied on opium, Indian hemp, and other narcotic drugs. III. It constitutes a negligible portion of the State’s Own Tax Revenue. Which of the above statement(s) is/are correct?
Explanation
State excise duty in Rajasthan is levied on alcoholic liquors for human consumption and on opium, Indian hemp and other narcotic drugs, so I and II are correct. It is a significant source of State Own Tax Revenue, so III is wrong.
RAS PrelimsRajasthan Economy · Macro Overview of Rajasthan Economy and State Budget
Q32. Match the specific tax (List I) with its corresponding tax base or characteristic in Rajasthan (List II):
Tax Type
Tax Base/Characteristic
A. Stamp Duty
i. Levied on the intra-state supply of goods and services
B. State Excise
ii. Levied historically on agricultural land holdings
C. SGST
iii. Levied on the execution of property transfer instruments
D. Land Revenue
iv. Levied on the manufacture and sale of liquor
Explanation
Stamp duty is specifically levied on the execution of legal property transfer instruments, while state excise is charged on the manufacture and sale of liquor. The State Goods and Services Tax applies to the intra-state supply of most goods and services. Historically, land revenue was based on agricultural land holdings, representing one of the oldest forms of taxation in the state.
RAS PrelimsRajasthan Economy · Macro Overview of Rajasthan Economy and State Budget
Q33. With the implementation of the Goods and Services Tax (GST), which of the following state taxes was subsumed into the GST framework?
Explanation
With the nationwide implementation of the Goods and Services Tax, various state-level taxes were subsumed into the new unified framework. In Rajasthan, this included the entertainment tax, except for those portions specifically levied by local bodies. However, taxes on alcohol for human consumption and petroleum products were kept out of GST, allowing the state to continue collecting excise and VAT.
RAS PrelimsRajasthan Economy · Macro Overview of Rajasthan Economy and State Budget
Q34. Which of the following statements regarding the impact of GST implementation on Rajasthan’s revenues is incorrect?
Explanation
While GST has expanded the tax base and eliminated cascading effects, individual states like Rajasthan do not possess the unilateral power to alter GST rates. All decisions regarding rate changes and exemptions are made collectively by the GST Council. This cooperative federalism structure ensures national uniformity but limits the state’s independent authority to adjust these specific tax rates for fiscal purposes.
RAS PrelimsRajasthan Economy · Macro Overview of Rajasthan Economy and State Budget
Q35. Read the following statements regarding GST revenues in Rajasthan: I. SGST revenues are directly credited to the Consolidated Fund of the State. II. Rajasthan receives a portion of the Integrated GST (IGST) collected on inter-state trade. III. The GST Council is chaired by the Finance Minister of Rajasthan on a rotational basis. IV. GST implementation has fully insulated the state from national economic slowdowns. Which of the above statement(s) is/are incorrect?
Explanation
State Goods and Services Tax revenues are credited to the state’s fund, and Rajasthan also receives a share of the Integrated GST from inter-state trade. However, the GST Council is chaired by the Union Finance Minister, not a state minister. Furthermore, GST implementation has not fully insulated the state from broader economic slowdowns, as tax collections remain linked to consumption.
RAS PrelimsRajasthan Economy · Macro Overview of Rajasthan Economy and State Budget
Q36. Which of the following pairs of ‘Tax’ and ‘Its Current Status under GST in Rajasthan’ is correctly matched?
Explanation
Entry tax was a state-level levy on the movement of goods into the state, and it was successfully subsumed into the Goods and Services Tax framework. In contrast, electricity duty and taxes on aviation turbine fuel remain outside GST in many states. Basic customs duty is a federal tax and was never part of the state-level taxes replaced by the GST system.
RAS PrelimsRajasthan Economy · Macro Overview of Rajasthan Economy and State Budget
Q37. Which Article of the Indian Constitution mandates the distribution of net proceeds of Central taxes between the Union and the States, a crucial source of revenue for Rajasthan?
Explanation
Article 270 of the Indian Constitution is the legal foundation for the sharing of net proceeds of most central taxes between the Union and the states. This mandatory devolution ensures that states like Rajasthan receive a predictable share of national revenue. These funds are crucial for financing state-specific development projects and maintaining essential public services across the expansive geographic territory of the state.
RAS PrelimsRajasthan Economy · Macro Overview of Rajasthan Economy and State Budget
Q38. The 15th Finance Commission used several criteria for the horizontal devolution of central taxes among states. Which criteria structurally benefits a geographically large state like Rajasthan the most?
Explanation
The 15th Finance Commission used several criteria for distributing central taxes, with the "Area" criterion proving highly beneficial for a geographically large state like Rajasthan. Because Rajasthan is the largest state in India by land area, it receives a higher weightage in the horizontal devolution formula. This allocation helps compensate for the higher costs associated with providing public services across sparsely populated regions.
RAS PrelimsRajasthan Economy · Macro Overview of Rajasthan Economy and State Budget
Q39. Which of the following was NOT a criterion used by the 15th Finance Commission for horizontal devolution of taxes?
Explanation
The 15th Finance Commission utilized specific criteria like area, forest and ecology, and demographic performance to determine the horizontal distribution of taxes among states. "Infrastructure Distance" was not among the criteria used by the commission.
RAS PrelimsRajasthan Economy · Macro Overview of Rajasthan Economy and State Budget
Q40. Read the following statements regarding Central transfers to Rajasthan: I. Tax devolution is a statutory right of the state based on Finance Commission formulas. II. Grants-in-aid under Article 275 are discretionary and not based on Finance Commission recommendations. III. Centrally Sponsored Schemes (CSS) form a significant part of central transfers to the state. IV. Rajasthan’s percentage share in the central divisible pool increased continuously from the 11th to the 15th Finance Commission without any dip. V. The State matching share is mandatory for most Centrally Sponsored Schemes. Which of the above statement(s) is/are correct?
Explanation
Tax devolution is a statutory right for Rajasthan, determined by Finance Commission formulas. Centrally Sponsored Schemes also form a significant portion of central transfers and usually require a mandatory matching share from the state budget. While grants under Article 275 are statutory, it is incorrect to say the state’s share in the central pool has increased continuously without any fluctuations.
Answer key for these questions
Q
Correct answer
31
(a) I and II
32
(a) A-iii, B-iv, C-i, D-ii
33
(d) Entertainment tax (excluding local body levies)
34
(b) Unilateral state power to alter GST rates
35
(b) III and IV
36
(a) Entry Tax -- Subsumed in GST
37
(c) Article 270
38
(d) Area
39
(c) Infrastructure Distance
40
(b) I, III and V
Key facts from Macro Overview of Rajasthan Economy and State Budget
In terms of GSDP at current prices, Rajasthan typically ranks between 5th and 10th among States.
The arid west grows bajra, moth bean and guar and relies on dryland farming and livestock; the east is fertile.
The Rajasthan FRBM Act sets a fiscal deficit target of 3 per cent of GSDP and a debt-to-GSDP target of about 20 to 25 per cent.
Revenue deficit is revenue expenditure minus revenue receipts; a persistent one means borrowing to meet routine expenses.
State Development Loans are market borrowings raised through RBI auctions; the Centre’s consent under Article 293(3) controls State borrowing.
The Indira Gandhi Canal Project helped the shift from subsistence to commercial farming; workforce dependence on low-yield agriculture is a structural challenge.
Frequently asked questions
How many RAS Prelims practice MCQs are there on Macro Overview of Rajasthan Economy and State Budget?
This page has 76 practice MCQs on Macro Overview of Rajasthan Economy and State Budget (Rajasthan Economy). Each has the correct answer, and most have an explanation.
What is the fiscal deficit target under the Rajasthan FRBM Act?
About 3 per cent of GSDP. The Act also aims at inter-generational equity, requires medium-term policy statements to be placed before the Legislature and sets a glide path for the revenue deficit.
What is the Revenue Deficit?
Revenue expenditure minus revenue receipts. A persistent revenue deficit means that the government is borrowing to meet its day-to-day expenses, instead of building assets, and it adds to the State’s debt and interest burden.
What are State Development Loans?
Market borrowings raised by a State government through auctions held by the RBI. Their interest rates are decided by the market and not fixed by the Finance Commission, so they move with the market.
