Q41. In the context of the Rajasthan State Budget, which of the following typically constitutes the largest component of Revenue Expenditure?
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 41–50 of 76 questions
Q42. High ‘committed expenditure’ (salaries, pensions, and interest payments) as a percentage of total revenue receipts in Rajasthan creates which of the following most appropriate economic impacts?
Explanation
High committed expenditure, which includes salaries, pensions, and interest payments, consumes a large portion of Rajasthan’s revenue receipts. This financial burden strictly limits the "fiscal space" or available funds that the government can use for new developmental projects or the creation of capital assets. Reducing this ratio is essential for freeing up resources to invest in the state’s long-term economic growth.
Q43. The following question consists of two statements, one labeled as Assertion (A) and the other as Reason (R). Examine these two statements carefully and select the correct answer.
Assertion (A): A persistent rise in revenue expenditure restricts the long-term economic development of Rajasthan.
Reason (R): It leaves a smaller portion of government resources for capital asset creation and infrastructure development.
Assertion (A): A persistent rise in revenue expenditure restricts the long-term economic development of Rajasthan.
Reason (R): It leaves a smaller portion of government resources for capital asset creation and infrastructure development.
Explanation
A persistent rise in revenue expenditure can restrict Rajasthan’s long-term development because it leaves fewer resources for creating capital assets. When a large portion of the budget is spent on recurring costs like salaries and subsidies, there is less money available for building roads, dams, or schools. This lack of investment in infrastructure can eventually slow down the state’s economic progress.
Q44. Identify the odd one out among the following expenditure items, based on its classification under the Revenue Account or Capital Account of the Rajasthan budget.
Explanation
Expenditures on salaries, interest payments, and routine maintenance are all classified as revenue expenditure because they are recurring costs that do not create new assets. In contrast, the construction of a new state highway is classified as capital expenditure. This type of spending results in the creation of a physical asset that provides long-term economic benefits to the entire state.
Q45. Read the following statements:
Statement I: Subsidies provided by the Rajasthan government for electricity to farmers are classified as revenue expenditure.
Statement II: Revenue expenditure usually results in a direct enhancement of the state’s future revenue-generating capacity.
Which of the statements given above is/are correct?
Statement I: Subsidies provided by the Rajasthan government for electricity to farmers are classified as revenue expenditure.
Statement II: Revenue expenditure usually results in a direct enhancement of the state’s future revenue-generating capacity.
Which of the statements given above is/are correct?
Explanation
Subsidies for electricity provided to farmers are categorized as revenue expenditure because they represent a recurring operational cost for the government. However, it is generally incorrect to say that revenue expenditure directly enhances future revenue-generating capacity. That role is primarily fulfilled by capital expenditure, which focuses on building infrastructure and assets that support long-term economic activity and increased state income.
Q46. Arrange the following broad sectors in typical descending order of their share in the Capital Outlay of the Rajasthan government in recent years:
I. Economic Services (Irrigation, Transport, Energy)
II. Social Services (Education, Health infrastructure)
III. General Services (Police buildings, administration offices)
I. Economic Services (Irrigation, Transport, Energy)
II. Social Services (Education, Health infrastructure)
III. General Services (Police buildings, administration offices)
Explanation
In the capital outlay of the Rajasthan Government, economic services such as irrigation, transport and energy take the largest share, followed by social services and then general services.
Q47. Which of the following statements regarding capital expenditure in Rajasthan is incorrect?
Explanation
Capital expenditure in Rajasthan involves the creation of physical assets and often includes loans provided to local bodies to spur development. It has a positive multiplier effect on economic growth. However, it is incorrect to suggest that capital projects are funded solely through tax revenue without any borrowing. In reality, market loans and central assistance are primary sources for financing these large-scale investments.
Q48. Read the following statements regarding the role of capital expenditure in Rajasthan’s long-term growth:
I. It helps in bridging the infrastructure deficit in the arid regions of the state.
II. It directly reduces the immediate fiscal deficit of the state.
III. It crowding-in private investment by providing essential logistical support.
Which of the above statement(s) is/are correct?
I. It helps in bridging the infrastructure deficit in the arid regions of the state.
II. It directly reduces the immediate fiscal deficit of the state.
III. It crowding-in private investment by providing essential logistical support.
Which of the above statement(s) is/are correct?
Explanation
Capital expenditure plays a vital role in bridging the infrastructure deficit in Rajasthan’s arid regions, providing roads and water systems. It also "crowds-in" private investment by offering the necessary logistical support and infrastructure for businesses to thrive. However, capital spending does not reduce the immediate fiscal deficit; rather, it often increases it as the state borrows to fund these long-term investments.
Q49. Match the following major capital infrastructure initiatives in Rajasthan (List I) with their primary sector/objective (List II):
| Initiative | Objective |
|---|---|
| A. Eastern Rajasthan Canal Project (ERCP) | i. Industrial and manufacturing clustering |
| B. Delhi-Mumbai Industrial Corridor (DMIC) nodes | ii. Irrigation and drinking water supply |
| C. PM MEGA Integrated Textile Region and Apparel (MITRA) Park | iii. Renewable energy generation |
| D. Solar Parks at Bhadla | iv. Specialized agro-textile export promotion |
Explanation
Rajasthan’s capital initiatives target specific developmental goals across various sectors. The Eastern Rajasthan Canal Project focuses on irrigation and drinking water, while the Delhi- Mumbai Industrial Corridor nodes promote manufacturing clusters. The PM MITRA Park is designed for textile export promotion, and the Bhadla Solar Parks aim for renewable energy generation. These projects are essential for the state’s integrated and diversified long-term economic growth.
Q50. Under the standard provisions of the Rajasthan Fiscal Responsibility and Budget Management (FRBM) Act, what is the generally prescribed limit for the State’s Fiscal Deficit as a percentage of GSDP (excluding special pandemic or power sector relaxations)?
Explanation
The Rajasthan Fiscal Responsibility and Budget Management Act generally sets the limit for the state’s fiscal deficit at three percent of the Gross State Domestic Product. This target is designed to ensure that the government does not over-borrow, maintaining long-term financial stability. While temporary relaxations may occur during crises or for specific power sector reforms, the three percent mark remains the primary benchmark.Answer key for these questions
| Q | Correct answer |
|---|---|
| 41 | (a) Salaries, wages, and pensions |
| 42 | (c) It strictly limits the fiscal space available for developmental and capital expenditure. |
| 43 | (a) Both A and R are true and R is the correct explanation of A. |
| 44 | (d) Expenditure on the construction of a new state highway |
| 45 | (a) Only Statement I |
| 46 | (a) I, II, III |
| 47 | (a) Funding via tax revenue with no borrowed funds |
| 48 | (b) I and III |
| 49 | (a) A-ii, B-i, C-iv, D-iii |
| 50 | (b) 3.0% |
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.