Meaning and scope of public finance - class-XI

The International Finance Corporation (IFC) is an international financial institution formed on July 20, 1956 and affiliated to world bank, that offers investment, advisory, and asset-management services to encourage private-sector development in developing countries since 2009, the IFC's stated aim is to create opportunities for people to escape poverty and achieve better living standards by mobilizing financial resources for private enterprise, promoting accessible and competitive markets, supporting businesses and other private-sector entities, and creating jobs and delivering necessary services to those who are poverty stricken or otherwise vulnerable

SEBI (Securities and Exchange Board of India) is the regulatory body for the securities market in India, established to protect investors and promote the development of the market.

Vijay Kelkar was the Chairman of the 13th Finance Commission of India, which made recommendations for the period 2010-2015.

A deficit in the balance of trade occurs when the value of imports of goods exceeds the value of exports of goods.

Unrequited transfers (also known as unilateral transfers) in the balance of payments include gifts, donations, and grants where no good or service is received in return.

The Planning Commission of India was established in March 1950 by a resolution of the Government of India to oversee the country's five-year plans.

The capital account in the balance of payments records all international transactions involving the purchase or sale of assets, including foreign borrowing and lending.

India has historically faced a persistent current account deficit due to high import costs, particularly for oil and capital goods. This structural imbalance means the Balance of Payments (BOP) has generally remained unfavourable throughout the planning period.

During the Fifth Five-Year Plan (1974-1979), India experienced a surplus in its Balance of Payments, largely due to a significant increase in remittances from Indian workers in the Gulf and a temporary improvement in trade conditions.

To finance a sustained current account deficit, a country must rely on external sources of capital. India has utilized a combination of official loans, commercial borrowings, and NRI deposits to bridge this gap.

The 1991 economic reforms included comprehensive measures to stabilize the BOP, including currency devaluation (exchange rate management), the removal of restrictive import licensing, and the lowering of customs tariffs.

Only 3 industries are currently reserved for the Public Sector: Atomic Energy, Railway Operations, and substances specified in the schedule to the Department of Atomic Energy notification. This is a significant reduction from earlier periods when many more industries were exclusively reserved for public sector.

A mixed economy is defined by the coexistence of both private enterprise and government-owned public sector entities. This structure allows for market mechanisms alongside state intervention.

The concept of 'Budgetary Deficit' was discontinued in India starting from the 1997-98 budget. It was replaced by more precise measures like fiscal deficit, revenue deficit, and primary deficit.

Budgetary deficit is the excess of total government expenditure (both revenue and capital) over total government receipts (both revenue and capital). It is the deficit in the budgetary estimates of the government.

Grants are non-repayable funds provided by one party to another, often for specific projects or development purposes. Unlike loans, there is no obligation to pay back the principal or interest.

Fiscal deficit is defined as excess of total budget expenditure over total budget receipts excluding borrowings during a fiscal year. In simple words, it is amount of borrowing the government has to resort to meet its expenses. A large deficit means a large amount of borrowing. 

This takes place due to the fact that the winning bidder places a higher value on the asset than all other bidders-ultimately paying too much for the asset(thus, the curse of winner is that it wins but after paying very high a cost).

Direct taxes account for about 7070 per cent of total taxes in Europe, in india the figure is around 3535 percent. The newly implemented GST might reinforce this if turns out to be a buyant source of revenue.

Both the statement are incorrect. If DFHI is not in the list, Statement 1 will become correct and similarly, money market of India makes maximum number of its instruments available to the banks (they are Call Money, Certificate of Deposit and Commercial Paper and the Repo).

Had 'disinvestment proceeds' not been there, the second statement would also have been correct till 2004. Disinvestment proceeds used to be one of the means of raising money to meet fiscal deficit requirements till 2005 unitll there was no National Investment Fund (the proceeds now go directly into this fund and are considered Public Accounts of India since 2013.

These figures represent the standard estimates for India's tax-to-GDP ratio. The aggregate ratio includes both center and state taxes, while the center's share is lower, and it decreases further after the constitutional devolution of funds to states.

The fiscal deficit is the difference between the total revenue and total expenditure of the government. Revenue deficit hence arises when the government's actual net receipts is lower than the projected receipts. So, the size of fiscal deficit is always higher than revenue deficit.

Central assistance to states is not a part of non-plan expenditure on the revenue side. Non-plan revenue expenditure is accounted for by interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments. 

Capital expenditure are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to undertake new projects or investments by the firm. 

Government generates revenue which it uses to manage it towards public works to be done.

Bharat Nirman and MGNREGA were flagship government schemes funded under the Plan Expenditure category, which focused on developmental goals and infrastructure creation during the Five-Year Plan era.

Plan expenditure is essentially the budget support
to the Central Plan and the Central assistance to State and Union Territory
plans. Like all budget heads, this is also split into revenue and capital
components. Defense is not part of plan expenditure.

Any expenditure that is incurred on programmes which are detailed to state for their plans is called planned expenditure. The estimated expenditure provided in the budget for spending during the year on routine functioning of the government is unplanned expenditure. So capital expenditure comprises both.

The budget deficit is the difference between current government's spending on goods and services and total current revenue from all types of taxes net of transfer payments.

The fiscal deficit for the 2012-2013 financial year was officially reported as 4.9 percent of GDP in the budget documents of that period.

The capital account of the government budget comprises capital receipts, such as loans and disinvestment proceeds, and capital expenditure, which includes spending on assets like infrastructure and machinery.

Gross Fiscal Deficit is defined as Total Expenditure minus (Revenue Receipts + Non-debt Capital Receipts). This calculation isolates the portion of expenditure that must be financed through borrowing.

The extent of fiscal deficit is an indication of how far the government is spending beyond its means.

Deficit financing, when excessive, increases the money supply, which leads to inflation. It can also exacerbate economic inequality by disproportionately affecting those with fixed incomes while benefiting asset holders.

The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) is an Act of the Parliament of India to institutionalize financial discipline, reduce India's fiscal deficit, improve macroeconomic management and the overall management of the public funds by moving towards a balanced budget.

Fiscal federalism, financial relations between units of governments in a federal government system. Fiscal federalism is part of broader public finance discipline. The term was introduced by the German-born American economist Richard Musgrave in 1959.

Fiscal deficit refers to the excess of total expenditure over total receipts (excluding borrowings) during the given fiscal year. Fiscal Deficit = Total Expenditure – Total Receipts excluding borrowings. The extent of fiscal deficit is an indication of how far the government is spending beyond its means.

Public finance is the study of the role of the government in the economy. It is the branch of economics which assesses the government revenue and expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones.

Primary deficit is one of the parts of fiscal deficit. While fiscal deficit is the difference between total revenue and expenditure, primary deficit can be arrived by deducting interest payment from fiscal deficit. Interest payment is the payment that a government makes on its borrowings to the creditors.

Public finance involves the government's role in promoting human capital, ensuring decentralization of resources, and providing essential public goods that the private market may under-provide.

The FRBMA is an act which institutionalizes and regulates financial discipline and help manage public funds in order to strengthen India's fiscal position. The purpose of FRBMA was to reduce fiscal deficit. 

The budget deficit is the difference between current government's spending on goods and services and total current revenue from all types of taxes net of transfer payments. So when borrowing is done from RBI or other sources, that creates the budget deficit.

The fiscal deficit is the primary deficit plus interest payments on the debt. Therefore, if refers to the difference in total expenditure and total receipts without loan and other liability.

By means of fiscal policy, government adjusts its spending levels and tax rates to monitor and influence a nation's economy. Though fiscal policies, government makes its public finance.

Dr. Vijay C. Kelkar served as the Chairman of the 13th Finance Commission of India, which made recommendations for the period 2010-2015.

A social security system is designed to provide financial protection to individuals against risks like old age, disability, or unemployment. Old age pension is a classic example of such a benefit.

In March 1999, the government further liberalized the industrial policy, reducing the number of industries reserved for the public sector to 6.

In the context of public finance and macroeconomics, the term 'public' is broad and encompasses the government, various public sector entities, and institutions that operate within the public sphere.

Mining is classified under the industrial sector (specifically the primary sector), whereas tourism, education, and health are categorized as service sector activities.

Peter Pyhrr is widely credited with developing the concept of Zero-Based Budgeting (ZBB) while working at Texas Instruments in the 1970s.

Telangana launched the 'Aasara' pension scheme, which included a specific category for single women, making it the first state in India to implement such a targeted social security measure in 2017.

The Finance Commission's primary constitutional mandate is to recommend the distribution of net tax proceeds between the Union and the States, and among the States themselves. None of the specific options provided (A, B, C) accurately describe its primary constitutional function.

Deficit financing involves both borrowing from domestic sources including the RBI and printing additional currency to meet government expenditure when revenue falls short. Both methods increase money supply in the economy.

The FRBM Act, 2003, mandates that the central government reduce the fiscal deficit by at least 0.5% of GDP annually to ensure long-term fiscal stability.

Pranab Mukherjee served as Finance Minister but never held the position of Chairman of the Finance Commission. The other individuals listed have served as Chairmen of various Finance Commissions.

In economics, services are characterized as invisible because they are not physical goods, and intangible because they cannot be touched or stored like physical inventory.

India has historically managed current account deficits by utilizing foreign exchange reserves and accessing international credit facilities like those provided by the IMF.

Historical economic data indicates that India's current account deficit as a percentage of GDP declined from approximately 1.9% in the pre-crisis period to 1% in the post-crisis period.

Statistical analysis of India's trade accounts during the sixth and seventh plans shows a decline in the share of net invisible earnings relative to the trade deficit.

The year 1979-80 is widely recognized in Indian economic history as the beginning of a period characterized by significant adverse balance of payments pressures.

The current account specifically covers trade in goods, services, and unilateral transfers. Borrowings and lending are recorded in the capital account, not the current account.

The 1990-91 BOP crisis was exacerbated by the Gulf War, which caused oil prices to spike and reduced remittances from Indian workers in the Middle East.

Budget deficit refers to the shortfall of revenues in comparison to the government expenditure. It can be measured as the difference between Total Receipts and Total Expenditure.

A budgetary deficit occurs when the government's total expenditure exceeds its total receipts (revenue and capital).

Deficit financing can be achieved through various means, including borrowing from the central bank (RBI), borrowing from commercial banks, or issuing new currency.

Deficit financing specifically refers to the method of funding public expenditure that exceeds the revenue generated by the government.

$Revenue\ deficit:$ Revenue expenditure of the Central Govt is composed of plan and non-plan expenditure of the Government and is met out of revenue receipts. In case of a gap in the revenue receipts and revenue expenditure, where the expenditure is on the higher side, there exists a revenue deficit which is financed from borrowed funds.

Revenue Deficit: It occurs when the actual amount of revenue expenditure and actual amount of received revenue do not match.
Fiscal Deficit: Fiscal deficit is an economic phenomenon, calculated as the budget deficit, plus the borrowings of the government.
Primary Deficit: Primary deficit is obtained by subtracting interest payments from fiscal deficit of any country of a particular year. It is the deficit in the fiscal budget, unaccounted for any borrowing related interest payments.
Budgetary Deficit: A budgetary deficit is a common economic phenomenon, which occurs when the spending of a government exceeds the government revenue. 

Based on historical economic data for the Indian fiscal year 2010-11, the fiscal deficit was recorded at approximately 4.8% of the GDP.

The fiscal deficit is calculated as the total budget deficit plus the government's borrowings and other liabilities.