Question 1

Capital receipts form the bulk of the government's earnings to fund its massive annual expenditure.

Accepted Answer

Revenue receipts, primarily direct and indirect tax collections (estimated at Rs 28.37 lakh crore for 2025-26), form the overwhelming majority of government earnings.

Question 2

A high fiscal deficit always indicates that the government is wasting money on freebies and populist schemes.

Accepted Answer

A fiscal deficit can be economically productive if the borrowed funds are channeled into Capital Expenditure that creates long-term physical assets, yielding future returns.

Question 3

Consider the following statements regarding the Union Budget 2025-26: 1. The fiscal deficit target has been set at 4.4 percent of GDP, successfully meeting the post-pandemic glide path goal of reaching below 4.5 percent by 2025-26. 2. The PM Dhan-Dhaanya Krishi Yojana aims to improve agricultural productivity in 100 underperforming districts by converging 36 central schemes. 3. The capital expenditure outlay has been significantly increased to constitute over 5 percent of the GDP to fund the National Infrastructure Pipeline. How many of the above statements are correct?

Accepted Answer

(b) Only two — Statements 1 and 2 are correct. The fiscal deficit target is 4.4 percent, fulfilling the sub-4.5 percent glide path, and PM Dhan-Dhaanya Krishi Yojana does target 100 districts. Statement 3 is incorrect because the capital expenditure outlay of Rs 11.21 lakh crore constitutes 3.1 percent of the GDP, not over 5 percent.

Question 4

Match the following announcements made in the Union Budget 2025-26 with their corresponding numerical targets or financial allocations: List I (Announcement) A. PM Dhan-Dhaanya Krishi Yojana target districts B. Urban Challenge Fund allocation C. Standard Deduction under New Tax Regime D. Disinvestment target for 2025-26 List II (Target/Allocation) 1. Rs 1 lakh crore 2. 100 districts 3. Rs 47,000 crore 4. Rs 75,000

Accepted Answer

(a) A-2, B-1, C-4, D-3 — The PM Dhan-Dhaanya Krishi Yojana targets 100 underperforming districts (A-2). The Urban Challenge Fund has been allocated Rs 1 lakh crore (B-1). The Standard Deduction under the New Tax Regime was increased to Rs 75,000 (C-4). The disinvestment target for the fiscal year was set at Rs 47,000 crore (D-3).

Question 5

Assertion (A): The Union Budget 2025-26 reduced the fiscal deficit target to 4.4 percent of GDP while maintaining capital expenditure at Rs 11.21 lakh crore. Reason (R): The Fiscal Responsibility and Budget Management (FRBM) Act legally mandates the complete elimination of both fiscal and revenue deficits by the financial year 2025-26. Select the correct answer.

Accepted Answer

(c) A is true but R is false — The Assertion (A) is factually correct as the budget indeed targets a 4.4 percent fiscal deficit and a Rs 11.21 lakh crore capex. However, the Reason (R) is false. The FRBM Act does not mandate the complete elimination of fiscal and revenue deficits by 2025-26. The specific target for 2025-26 was a revised 'glide path' established post-COVID to bring the fiscal deficit below 4.5 percent, not to eliminate it entirely.

Presentation of the Union Budget 2025-26

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