The financial sector consists of all institutions dealing with financial products.
The financial sector is responsible for adequate money flow.
Which of the statements given above is/are correct?
Correct Answer:
(C)
Both 1 and 2
The financial sector consists of all institutions dealing with financial products. They provide financial services to citizens or businesses.
The financial sector reforms bring changes to this sector. It can be anything from operation guidelines to the entry of foreign entities.
The financial sector covers banks, insurance businesses, investment funds, NBFCs, etc. These companies can be government-owned or private.
The financial sector is responsible for adequate money flow. They allow money from savers to reach borrowers.
For example, banks and stock exchanges allow people to invest or save money. They further use these deposits to fund companies or individuals.
Ques:
22
Raghuram Rajan committee on financial reforms gave proposals of:
Correct Answer:
(C)
Creating more efficient and liquid markets
The Raghuram Rajan committee on financial reforms was a committee constituted by the government of India in 2007. It gave proposals on the following:
Macroeconomic and Financial development
Broadening Access to finance
Levelling the playing field
Creating more efficient and liquid markets
A growth-friendly regulatory framework
Creating a robust infrastructure for credit
Ques:
23
What are the recommendations of the Financial Sector Legislative Reforms commissions:
Proposal for the Indian Financial Code
Establishment of a Monetary Policy Committee
Public debt management
Choose the correct answer using the codes given below:
Correct Answer:
(D)
All of the above
Key recommendations:
Replacing a substantial portion of existing financial laws
Monetary Policy committee
Public debt management
Indian Financial code
Streamline and modernize the Indian Financial system
Ques:
24
The total revenue collected by the government from all types of taxes, including direct taxes (like income tax, corporate tax) and indirect taxes (like GST, excise duty, customs duty), is called?
Correct Answer:
(B)
Gross Tax Revenue
Gross tax revenue refers to the total amount of money a government collects from taxes before any deductions, refunds, or other adjustments are made. It's essentially the raw, unadjusted amount of tax money collected.
In other words, the total revenue collected by the government from all types of taxes, including direct taxes (like income tax, corporate tax) and indirect taxes (like GST, excise duty, customs duty).
Ques:
25
The revenue that remains with the central government after accounting for the portion that is shared with the states, is called?
Correct Answer:
(A)
Net Tax Revenue
Net tax revenue refers to the income a government collects from taxes, minus any portion of that revenue shared with state governments. Essentially, it's the government's total tax income after taking into account revenue transfers.
In other words, the revenue that remains with the central government after accounting for the portion that is shared with the states.
Ques:
26
The net tax revenue is arrived at after deducting the revenue collections under:
Correct Answer:
(D)
All of the above
The net tax revenue is calculated by subtracting revenue collections from cesses and surcharges, revenue from Union Territories, and tax administration expenditure from the gross tax revenue. This process determines the amount of tax revenue that is available for sharing with states and the Union government.
Ques:
27
The Union government has two routes of direct financial transfers to States:
Correct Answer:
(B)
Centrally Sponsored Schemes, Central Sector Schemes
The Union government utilizes two main channels for direct financial transfers to States: Centrally Sponsored Schemes (CSS) and Central Sector Schemes (CSec Schemes). CSSs are schemes where both the Union and State governments share funding and implementation, while CSec Schemes are entirely funded and implemented by the Union government.
Ques:
28
The Constitution divides the taxing powers between the Centre and the States. Consider the following statements in this context:
1. Parliament has exclusive power to levy taxes on the subjects enumerated in Concurrent List.
2. The state legislature has exclusive power to levy taxes on subjects enumerated in the State List.
Which of the statements given above is/are correct?
Correct Answer:
(B)
2 only
Seventh Schedule of the Constitution divides the taxing powers between the Centre and the States as follows:
The Parliament has exclusive power to levy taxes on subjects enumerated in the Union List,
The state legislature has exclusive power to levy taxes on subjects enumerated in the State List,
Both can levy taxes on the subjects enumerated in Concurrent List whereas residuary power of taxation lies with Parliament only.
Ques:
29
Consider the following statements:
Government borrowing falls under capital receipts in the Budget document.
Government borrows through issue of government securities called G-secs and Treasury Bills.
Which of the statements given above is/are correct?
Correct Answer:
(C)
Both 1 and 2
The Government borrowings are classified as capital receipts within a budget document. This is because they create a liability for the government, representing an inflow of funds that are typically used for long-term investments or capital expenditures, not just for day-to-day operations.
Usually, Government borrows through issue of government securities called G-secs and Treasury Bills.
Ques:
30
Loans that are taken not by the Centre directly, but by another public institution which borrows on the directions of the central government, are known as:
Correct Answer:
(B)
Off-budget borrowing
Off-budget borrowings are loans taken by public institutions on behalf of the central government, rather than directly by the Centre. These borrowings are used to finance government expenditure but are not included in the official fiscal deficit calculation, as the liability is not formally on the Centre. This helps to keep the country's fiscal deficit within acceptable limits.