Q51. Which of the following is a correct conceptual interpretation of the Fiscal Deficit in the context of the Rajasthan State Budget?
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 51–60 of 76 questions
Q52. Read the following statements regarding sources that the Rajasthan government can use to finance its gross fiscal deficit:
I. Market Borrowings (State Development Loans)
II. Loans from the Central Government
III. Printing new currency notes through the RBI
IV. Public Account receipts (like Small Savings, Provident Funds)
Which of the above statement(s) is/are correct?
I. Market Borrowings (State Development Loans)
II. Loans from the Central Government
III. Printing new currency notes through the RBI
IV. Public Account receipts (like Small Savings, Provident Funds)
Which of the above statement(s) is/are correct?
Explanation
To finance its fiscal deficit, the Rajasthan government relies on market borrowings through State Development Loans and loans from the central government. It also utilizes public account receipts, such as provident funds and small savings. However, the state cannot print new currency to cover its deficit; that authority belongs exclusively to the Union Government and the Reserve Bank of India at the national level.
Q53. Read the following statements:
Statement I: Gross Fiscal Deficit is equal to Gross Borrowing of the state government.
Statement II: If the state eliminates its Revenue Deficit completely, its Fiscal Deficit will simultaneously become zero.
Which of the statements given above is/are correct?
Statement I: Gross Fiscal Deficit is equal to Gross Borrowing of the state government.
Statement II: If the state eliminates its Revenue Deficit completely, its Fiscal Deficit will simultaneously become zero.
Which of the statements given above is/are correct?
Explanation
The gross fiscal deficit is indeed equal to the total gross borrowing of the state government for a fiscal year. However, eliminating the revenue deficit does not necessarily mean the fiscal deficit will become zero. A state could have a revenue surplus but still run a fiscal deficit if it borrows money to invest heavily in capital projects and infrastructure development for the future.
Q54. If the Rajasthan government runs a persistent Revenue Deficit, it implies that:
Explanation
A persistent revenue deficit means that the government borrows to finance its day-to-day routine expenses, since revenue receipts fall short of revenue expenditure.
Q55. Which of the following actions would NOT help the Rajasthan government in reducing its Revenue Deficit?
Explanation
Rationalising subsidies, improving tax collection and trimming administrative costs reduce the revenue deficit. Higher capital outlay on highways is capital spending and does not reduce it.
Q56. The Revenue Deficit of Rajasthan is calculated as:
Explanation
Revenue Deficit is Revenue Expenditure minus Revenue Receipts.
Q57. Read the following statements regarding the Revenue Deficit in Rajasthan:
I. A zero revenue deficit indicates that current expenses are entirely met by current revenues.
II. Rajasthan has historically maintained a revenue surplus throughout the last two decades.
III. The FRBM Act mandates a glide path to reduce and eliminate the revenue deficit.
IV. High pension liabilities post the restoration of the Old Pension Scheme (OPS) may pressure the revenue deficit.
V. Revenue deficit is always higher than the fiscal deficit in absolute numbers.
Which of the above statement(s) is/are correct?
I. A zero revenue deficit indicates that current expenses are entirely met by current revenues.
II. Rajasthan has historically maintained a revenue surplus throughout the last two decades.
III. The FRBM Act mandates a glide path to reduce and eliminate the revenue deficit.
IV. High pension liabilities post the restoration of the Old Pension Scheme (OPS) may pressure the revenue deficit.
V. Revenue deficit is always higher than the fiscal deficit in absolute numbers.
Which of the above statement(s) is/are correct?
Explanation
A zero revenue deficit means current expenses are met by current revenue, the FRBM Act sets a glide path to eliminate it and pension liabilities after restoring the Old Pension Scheme may pressure it. Rajasthan has not held a revenue surplus for two decades, and the revenue deficit is not always larger than the fiscal deficit, so II and V are wrong.
Q58. Match the deficit term (List I) with its specific economic implication for Rajasthan (List II):
| Deficit Term | Economic Implication |
|---|---|
| A. Revenue Deficit | i. Indicates current year’s fiscal operations excluding legacy debt burden |
| B. Fiscal Deficit | ii. Indicates the total borrowing requirement from all sources |
| C. Primary Deficit | iii. Indicates dissaving by the government on the current account |
| D. Monetized Deficit | iv. Not applicable/available to state governments as they cannot print money |
Explanation
Revenue deficit shows dissaving on the current account, fiscal deficit shows the total borrowing requirement, primary deficit shows fiscal operations excluding interest on legacy debt and monetised deficit is not available to States as they cannot print money. This gives A-iii, B-ii, C-i, D-iv.
Q59. The Rajasthan FRBM Act specifies targets for debt management. What is the generally accepted target range for the outstanding Debt-to-GSDP ratio for the state, aiming for fiscal prudence?
Explanation
The Rajasthan FRBM framework aims for an outstanding debt of about 20 to 25 per cent of GSDP, for fiscal prudence.
Q60. Which of the following pairs concerning the Rajasthan FRBM Act is incorrectly matched?
Explanation
The FRBM Act aims at inter-generational equity, sets a fiscal deficit target of about 3 per cent of GSDP and requires the Macro-economic Framework Statement to be placed in the Legislature. It does not aim to keep a massive revenue deficit, so C is incorrect.Answer key for these questions
| Q | Correct answer |
|---|---|
| 51 | (c) Total annual borrowing requirements of the state |
| 52 | (b) I, II and IV |
| 53 | (a) Only Statement I |
| 54 | (d) Borrowing to finance day-to-day routine expenses |
| 55 | (a) Increasing capital outlay on new highway construction |
| 56 | (c) Revenue Expenditure minus Revenue Receipts |
| 57 | (a) I, III and IV |
| 58 | (a) A-iii, B-ii, C-i, D-iv |
| 59 | (b) Range of 20% to 25% |
| 60 | (c) Target for Revenue Deficit -- Aiming to maintain a massive Revenue Deficit |
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.