 There are two files, questions are kept as split. In the next few minutes, what we are going to do today is look at the public finance and budget related questions alone from the previous year. We have taken questions from the past five years to up to 10 years whichever is relevant in the concert. Before 10 years there would have been a current affairs of that particular year, so we have not chosen such questions. Whatever is relevant and stands good even for today, those kinds of questions have been selected. Many of which you would have already seen through the examination, you would have gone through the previous year questions. But this is to give you an exposure which are all the areas where the questions can come in the public finance. So yesterday we saw some budget related data also. So how they have asked upon the components upon the data upon the formula and it's not a very exhaustive. I wouldn't say every part we have covered but whatever we could do in the next couple of hours we will be able to try to do. So is the screen visible to the last row? So this question of the previous year basically a current of our kind of a question only. So they are asking about the trust and the investment of the infrastructure investment trust. And whenever we say about the earnings we always talk about the taxes. When we talk about the income we are going to talk about the taxes. But what is getting taxed is sometimes the government can give exemption to certain things. Sometimes it can bring newer things into the income tax or any kind of taxation. So therefore they have given two statements here. Interest income from the deposits in the infrastructure investment trust. Distributor to the investors is exempted from tax but the dividend is taxable. So is the statement right? Even yesterday we studied something about this. Yes or no? The statement is wrong. Why is it wrong? Dividend distribution tax is not there but interest will be taxed. So oppositely it should have come in the statement. So therefore the statement is wrong. So it should have been written as dividend income from the deposits is exempted from tax. But the interest is taxable. So it should be in the opposite direction. Therefore the statement is wrong. The second statement, invits are recognized as borrowers under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002. First if we have to call this invit coming under the Surface Act we should know the significance of Surface Act. What is Surface Act? That's giving enormous power to the banks to recover the bad debt. That's what we have studied. So non-performing assets will be there. Whenever it is there through the Surface Act there are asset reconstruction companies or intermediaries who will go and recover. Say for example if a farmer has taken the loan on the tractor bank will send people to go and recover the tractor which we have seen in many movies also and then this is what is also becoming one of the reasons for the farmers suicide and other things which we have studied. So we want to mention that it is the enormous power given to the banks. And now why we are talking about that particular thing when we are talking about the infrastructure investment trust. So first we need to understand this trust is something like a company which is standing between the investors and the projects. Infrastructure projects need heavy amount of capital investment. So you all will be familiar with the word mutual fund. So it is like you are going to invest in different types of activities. One of the activities is you are all the investors. You can be individuals, you can be institutions, you can be bank, you can be anybody and you people come and give the money to the infrastructure investment trust. The trust is going to take the money and go and invest in the infrastructural development projects. That's where when the projects are happening in a very good way we get the share income and that is being given to you in the form of the dividends. So if it is all the institutions, if it is all individuals, we will share with you the dividends. But what if the bank is coming and investing in this kind of trust and what happens when this project fails. In such case how the bank will be able to recover the money from the trust. So in those kind of situations we have to bring in this, it will be treated as a borrower's under the surfacing act. So if a farmer is borrowing from the bank and he is going as a default he will be put under surfacing act. Similarly the trust is borrowing from the bank in which case if they default that will also be brought under the surfacing act. So therefore that's being recognized. Actually you will see that invits are sitting under SEBI. When you say SEBI, SEBI has its own set of rules and regulations. Surfacing act is coming under banking system which comes under RBI. You always say RBI has a set of rules for the financial system, SEBI has a set of rules for the stock market. But this is an overlap of both the systems coming into the picture. So then we have the second question. India accounts for 3.2% of global export of goods. Many local companies and some foreign companies operating in India have taken advantage of the production linked incentive scheme. First statement, if you are not very sure of the data, mostly this is why we study some data from the budget. This was not true in that particular year. The data was not true. So where and all you have to be cautious about the data, such kind of questions will be alerting you to look at it. So then we have the second thing. Yesterday also we studied about this production linked incentive scheme. This is true. So statement one is wrong, statement two is correct. So now this is your hardcore the borrowing of the government. A share of the household financial savings goes into government borrowings. Is it true? How does it go? Household financial savings goes into the post office or elsewhere. That will also be going as the borrowing for the government. Data securities issued at market related rates and options form a large component of internal debt. Is it true? Data securities you can call them as the government securities. So government securities are issued. You people buy it. See this is the two things which we discussed yesterday. One was we said indirectly it will go to the post office. It will take your money. Another one is it will directly give the securities to you and you will be buying it. So the second one is the direct form. The first one is the indirect form. Both are true. Right? And you also remember we studied that market borrowing is the largest way by which the government is mobilizing the money for the borrowing. So both the statements are correct. Why we got a doubt that it is not true? It is a large component of internal debt also. What is the problem of calling it as an internal debt? It is a main source. See whichever is called as large means it is the biggest one in the descending order. So if I say today income tax is one of the larger components of the taxes of India of course it is because it is on the top. Very closely GST is following. One by say difference. But still I will say I will call large component of the tax revenue of the government. So if the language is written as an auction forms the large component then it becomes difficult. It means it is the only thing. So the statement is not B. It is a large component of internal debt. So in such case also you can still accept it as it is meaning like it is one of the largest components of the internal debt. So are we clear with this question? So which of the following is likely to be the most inflationary in its effects? Ajay, what is the answer? Anyways we have four options here. We have repayment of public debt, borrowing from the public to finance a budget deficit, borrowing from the banks to finance a budget deficit, creation of new money to finance a budget deficit. So obviously we know monetization of the deficit is what is going to result in the most inflationary in its impact. Why repayment of public debt is not as inflationary as this? That is also going to put in money in the hands of the people is it not? Second thing is borrowing from the public. So we are taking away the money from the hands of people agreed. Borrowing from the banks to finance a budget deficit there will be a limitation to do it. So it won't be that enormous like the other thing. But between the A and the D why are we choosing D? The increase of money supply but to balance that the production has to be somewhat good. They are not. One thing is repayment of public debt is I would have given 100 rupees to the government. Government is giving me back some amount along with it. So to the amount what I gave only it's going to give me back the rate of interest. But the last one is the extreme one. It's not having any basis to do it. Just to meet out with the deficit it's going to go for the creation of the new currency. Therefore though the A is also one of the right answers we choose D as the most appropriate answer. So now you have to tell in India which of the following can be considered as public investment in agriculture. Some are policies, some are investments. Investments means I am talking in terms of the capital investments. The assets kind of a thing. Which of the following you think will be an answer? First one, is it a asset? No, computerization of primary agriculture credit societies. Yes, it is a social capital development. No electricity supply to farmers. No waiver of agricultural loans. No setting up of cold storage facilities. Now we have to see options what UPSC has given us. Sometimes we will be narrowed down to do things. Ajay, I want a replacement of the file. This will not help. Answers I take and give it to you, it will be useful. So here are in this question 2, 3 and 6. 6 and 2, we know that it is for sure. And we didn't have other option other than choosing the C by the elimination technique because we don't want to answer everything together and this file we want to eliminate, waiver of agricultural loans and all may not be considered as the public investment. Therefore, we end up with the answer 2, 3 and 6. What I will do is still I get my revised file without the answers. I have another set of simple questions which we will be going through. There will not be any answers in this. Once I get it, I will again start with that. So, yes, social capital is basically health and education. It's establishing the schools, establishing the hospitals. They all can be called as the social capital. It can also be resulting in the creation of human capital. It's basically the welfare measures. For the agriculture, it won't be very suitable. Maybe you can give them some skills in the post harvesting facilities and make them a better person. So in which case the human capital is improving or you are giving some evening education to the farmers, social capital. So like that. There is a problem with this. Telecommunication, all of these things. If you are installing the equipments and other things, it will fall under the manufacturing. As such, supplying and other things will sometimes come under the servicing. Telecommunication towers are all into the secondary sector. As such, what you are giving as a service will all be taken under the tertiary sector, service sector, like that. Supplying of the pre-electricity. See, it's only like a subsidy. As such, if you see, it's a subsidy. It won't be called as a public investment. It is public only, but you don't want to call it as an investment. You want to call it as a subsidy, which they should have actually paid, but they are not paid. So it is a subsidy. So now we will come to the small basics, which you already may be knowing many of these things. Which one of the following is not a source of public revenue? Subsidy. Subsidy. It's part of your revenue expenditure, not the revenue receipts. So then we have redistribution of income in a country which is the best brought about through, what is your suggestion? We need to have an equality, betterment of the equality. That's the meaning of it. Progressive taxation combined with progressive expenditure. Progressive taxation combined with regressive expenditure. Regressive taxation combined with regressive expenditure. Regressive taxation combined with progressive expenditure. A. B. C and D ruled out we don't want to have a regressive taxation at all. Already we are suffering enough with our GST. So we don't want to have this. But first two things, out of which the most appropriate will be A. That's right. So spending should also happen as your level of income is becoming higher. Taxation should also happen as your level of income is becoming higher. So that means we are not meaning the household that is spending or it is the government. Everybody, you should spend according to your capability. Income level. Government should progressively spend or people should... It is basically your households only. See progressive taxation is as your level of income is increasing. You are going to pay more taxes. Less income, less taxes, less spending. More income, more taxes, more spending. They are not even trying to talk about the expenditure tax here. They are only asking you to spend to the level of your income so that the taxation and the understanding of the economy will be better. People who are very highly having income, they should be spending more. They should be spending more. A rich person, see whatever we spend on the food, the clothing and other things, beyond a certain extent we won't be able to spend for any family. But there are ways of luxury and all which the higher income people will be able to spend. So we expect the higher income people to spend more. But the other way round will start happening. Higher income people will spend up to certain extent and they will go into the mode of savings. Lower income people, all their income they will spend because already they have only very less income in their hands. But everybody should do some savings. That will also be inbuilt into this concept. Unless we do the savings, we won't be able to mobilize the investment. So now we are convinced with this second question. Which of the following is not a tool of fiscal policy? Please read all the answers. What is fiscal policy first? Governments policy which is related to the budget. Either the receipts of the budget or upon the expenditure of the budget. Anything you mention, yesterday we saw one graph, the organogram kind of a diagram. Anything you mention upon it will be a fiscal policy. So now we have to go back and see public expenditure is it a tool of fiscal policy? Yes. Interest rate, is it a tool of fiscal policy? Where does this come? RBI. So that's the concept of monetary policy. Deficit financing? Yes, we do. We have five different sources of borrowing. We take from different sources. Taxation is definitely a tool of fiscal policy. So here we are going to answer this as interest rate. The fiscal policy is concerned with which of the following. The volume of currency that banks put in the economic system. The policy regarding taxation and government expenditure. Policy for regulation of stock markets. Policy for countries relations with IMF. This is B. Now you have to tell answer for this. Compact revenue deficit, fiscal deficit will always be what? More or less same all of these. This is not okay. Will always be what? Fiscal deficit and revenue deficit will be the same. This is ruled out. This is ruled out. Now we are left with the two options. More or less. Fiscal deficit will always be more. Yesterday's data, we remember. How much was fiscal deficit? Exam is coming right? 5.1 percentage. How much was the revenue deficit? 2 percentage. They wanted to reduce it from 2.8 percentage to 2 percentage. Is it not? So fiscal deficit will always be larger than the revenue deficit. Why? We have total expenditure in case of your fiscal deficit. But we have only revenue expenditure in case of your revenue deficit. So totality is fiscal deficit. A part of it will be revenue deficit. So it will be always more. Now you can give some simpler answer to this. Fiscal deficit refers to what? Total expenditure minus total revenue receipts. Total expenditure minus revenue receipts plus NDCR. Revenue deficit minus interest payments. Total expenditure minus revenue receipts plus capital receipts. What is the answer? So this is last year's question. Fiscal deficit of the union government had reached 9.2 percentage of GDP during the pandemic. 2021. Fiscal deficit has moderated to 7.7% of GDP in financial year 2022. Revenue collection over the last two years has gone down. What is your answer? 2023 question. Fiscal deficit it went high. It touched up to 9.1%, 9.2 percentage. But because of fiscal deficit, did the GDP get moderated? That's the second point. Do you agree or not? No. Revenue collection over the last two years has it gone down? Slowly it is recovering after 2020. So therefore, answer is only one. No, no, no. Yeah, that's only A. How do I know this? So the answer is A, only one. This, which one are the following is generally known as the twin deficit? Fiscal deficit. Fiscal deficit and the current account deficit. I think there is a spelling mistake. Two A's have come. But anyways, we have fiscal deficit and the current account deficit being called as the twin deficit condition for the country. What is the effect of deficit financing? Reduction in taxes, increase in wages, increase in money supply, decrease in money supply. What will happen because of deficit financing? Deficit financing is you are going to borrow from different sources and you are going to finance it. But what will be the impact of it? Increase in money. The term revenue neutral rate was in news recently related to what? Goods and services tax, foreign portfolio investment, disinvestment of public sector units, foreign direct investment. We were mentioning about this in yesterday's class. Did we mention something like the governments are targeting towards the 15 percentage of the GST? On an average, we said 0%, 28%. There are different percentages. But they all are targeting towards the 15 percentage. That is what is called as revenue neutral rate. I was earning earlier this much as a state. On an average, I was getting 15 percentage. Now again, am I getting back my 15 percentage or not in the new GST regime? So, I want to find it out. So, that is what is this revenue neutral rate. So, this is the answer for this. It is related to the goods and services tax. Consider the following actions of government. Reducing the tax rates, increasing government expenditure, abolition of gradually. In the above context of economic slowdown. Remember the context. Which of the above functions can be considered as part of fiscal stimulus package? You are all very familiar with the word fiscal stimulus. So, what should you do when there is a slowdown? You should reduce the tax rates, increase the government expenditure. So, the answer is A, 1 and 2. Pension, gradually. The savings what you do along with your salary. There are different ways how the government employees are allowed to do the voluntary savings. Like for the health insurance. So, we keep some amount of our money with the government. At the time of the retirement, we will be getting it. So, those kinds of savings. Now, the question. Yesterday's class, we did this. If primary deficit is 0, then amount of borrowing will be equivalent to what? Can we first write the primary deficit formula? Can somebody tell me the formula for primary deficit? Fiscal deficit minus interest payments is equivalent to PDG. So, now they are saying primary deficit is 0. Then what will happen? How did it become 0? Both the values were equal. So, fiscal deficit is the borrowing which we know, DCR. Yes or no? We know that fiscal deficit is the borrowing. So, the interest payment is equivalent to the fiscal deficit which is why your primary deficit became into 0. Do we understand this? So, the answer is just equal to the amount of borrowing which is what is the fiscal deficit will be equivalent to the interest payment. This is a static question. We had been repeatedly mentioning where we got the budget documents yesterday. So, this is Department of Economic Affairs. Now, you can tell which one of the following are included in the capital budget of the government of India, expenditure on acquisition of armets like roads, building, machinery, loans received from the government, loans and advances granted to the states and union territories. Capital budget will have two things. Is it not? What are they? Capital receipts and capital expenditure. This one is capital expenditure. Is it not? This is capital expenditure. Loan received from the government, maybe from other governments, other countries' governments. We can, it's called as capital receipts. So, we should keep it under DCR. It's one of these sources of the DCR. Loans and advances granted to the states and union territories will be placed under capital expenditure. So, now we go see the answer. All of these. I'm slightly worried about the word grants. Instead of grants, it should be written as loans and advances given to the states and union territories because we don't want to place the word grants under capital afford. Conditional grants. Conditional grants. It will come under capital. It will come under capital. That is also not mentioned there. It's just to written as loans and grants. We don't make use of the grants word that loosely in the examination but I don't have an option here to choose. In my answer, what should have come actually, one and two, it should have come but I don't have an answer here to choose. Therefore, I am going towards all of the above. So, this you can give the answer out of the ABCD. Ministry of Industry, CSO, RBI, Ministry of Finance. What is what? Ministry of Industry will be doing what? We know at least one thing. Ministry of Finance does economics. That much we know. So, let us pick D to 2. So, we are left to between B and C. Out of this, we know RBI does on currency and all if it comes, it will go to RBI. So, C to 1. Oh, that is also fixed. So, both are the same. Now comes the question. CSO is doing national account statistics. That also we know. So, therefore, B to 4. B to 4. So, B will be the answer. Which of the following is not included in the priorities of the Indian budget? 2020-23, Gati Shakti, inclusive development, productivity enhancement. That's a small spelling mistake there. And investments, sunrise opportunities, energy transition, climate change, disinvestment, none of the above are more than one of the above. What is the answer? Which is not included in the priorities? Question is not question. Answer is disinvestment. Right? You can answer none of the above because the question is negative question. Which of the above are included means then you can say more than one of the above, but the question is a not question. Therefore, you have to answer one of it, which is disinvestment. Which of the following is not one of the priorities termed the Saptarishi adopted in the union budget for financial year to guide the country towards Amrita Kaal, thus providing a blueprint for an empowered and inclusive economy, population control. We had Garib, Yuva, Naari Shakti and Anna Dutta. We are not seeing green growth is all towards a sustainable development of our Amrita Kaal, truth power reaching the last mile, inclusive development is reaching the last mile. So population control is not included in this. A large part of the fiscal deficit in union government budget is filled by what? A large part of the fiscal deficit. Domestic borrowings, that's right. Who can levy agriculture income tax in India? There's no agriculture income tax, but who can levy it? Huh? There's so many answers. Badge fourth, where are you? I'm starting again my story. We studied finance commission. We had a union list. We had a state list. We had a concurrent list. But who will be doing this is only state government, right? This is one index which you have to memorize, which we didn't mention in yesterday's class, but it's being actually given by RBI, the bare necessities index. This is a factual thing. So I have to tell you what is wrong in this. The bare necessities index doesn't have six dimensions. It has five dimensions. And bare necessities index has been done in two years, 2012 and 2018 based on the NSSO data. So other two statements are right. They have indicators, 26 indicators, and they come up with both the rural and urban regions, but two and four are wrong for the above reasons. So the answer will be one and three. Tax on sale of inherited property. If you're selling a property and if you're getting some amount out of it, what will be levied upon it? It will be the capital gains tax. Under constitutional provision of tax assignment in India, which of the following is a tax exclusively imposed and collected by the states? This is again land revenue. Which type of tax will help in reducing income disparities? Progressive taxes. We'll read the statements. Direct taxes are those taxes in which impact is on one person and incidence on the other person. Indirect taxes are those taxes in which impact and incidence are on the same person. They have swapped it, right? The burden of indirect taxes can be shifted. Why the indirect taxes are termed the regressive taxing mechanism? They are charged at higher rate than direct taxes. They are charged the same rates for all income groups. They are not charged the same rates for all income groups. None of you go. Option B. Actually regressive means when the income level is increasing, the tax rate is decreasing, but you don't even have to be saying it is decreasing. Even if you put the same rate upon everybody, that will also be resulting in the meaning of becoming regressive, which is why most of our indirect taxes are regressive in nature. Consider the following demographic performance for us in ecology, governance reforms, stable government, tax and fiscal efforts. For the horizontal tax devolution, the 15th Finance Commission used how many of the above population areas other than population area and income distance. Population has been already given in the question. Area is the second which is given in the question. Income distance is also given in the question. 5, tax and fiscal efforts, for us in ecology, demographic performance. And this is what we have done with this. That is my other question. So we are coming back to the first poll what we had. This we finished. This we finished. Okay, sixth question. Which of the following factors or policies were affecting the price of rise in India in the recent past? Minimum support price, governments trading, governments stockpiling, consumers subsidies. You are able to see the question and the answers. You need to have one, definitely, right? We need to have four. So what do we have as an answer? Stockpiling, one, two, three and four, all the above. Government has to trade, government has to distribute, government has to stock. So the answer is D. So with reference to the international trade of India at present, which of the following statements are all correct? India's merchandise exports are lesser than its merchandise imports. Is it true? Exports are less than imports. Is it true? Exports are less than imports. That is why we are ending up in deficit. India's imports of iron and steel, chemicals, fertilizers, machinery have decreased in recent years. Import has decreased. India's exports of services are more than its imports of services. That is true. India suffers from an overall trade or current account deficit. That is true. So where do we have the answer? One, three and four only. This is a finance related thing, disputable question, but anyways. In the context of Indian economy, non-financial debt includes which of the following? Housing loans owed by households amounts outstanding on credit cards, treasury bills. They are all, all the three are the answer for the non-financial debt. There are some classifications for financial debt and the non-financial debt. We will not be having issue with housing loans or with the treasury bills, but we will have issue with amount outstanding on credit cards. But UPSC gave the answer only as all the above three. So we are just going ahead with UPSC's answer. With reference to the Indian economy after 1991 economic liberalization, consider the following statements. Worker productivity increased in urban areas while it decreased in rural areas. Is it true? Worker productivity has decreased in rural areas. The percentage share of rural areas in the workforce is steadily increased. Steadily increased. We have to be careful with such words. In rural areas, the growth in non-form economy increased. That is true. For sure we can say. The growth rate in rural employment decreased. That is false. Where is our answer? Only three. Most of India's external debt is owed by governmental entities. Is it true? Government has very little external debt. Only the countries, the companies, borrowers, they have larger amount of external debt. So that's not true. All of India's external debt is denominated in US dollars. Is that true? That's also not true. So neither one, not. The economic cost of food grains to the food corporation of India is minimum support price and bonus if any paid it to the farmers plus what? Food corporation of India is doing what? It's procuring the food grains, it is storing it, it is transporting and distributing it to the states. So these are all the activities. So the answer is C. The question, purchasing power parity exchange rates are calculated by comparing the prices of the same basket of goods and services in different countries. Is the definition true? That is true. In terms of PPP dollars, India is the sixth largest economy in the world. Is that true? We are third largest economy right now. So statement two is wrong. So we are having A1. Among the agricultural commodities imported by India, which one of the following accounts for the highest import in terms of value in the last five years? Vegetable oils. Food inflation we can understand yesterday we were discussing about it. Fiscal responsibility and budget management review committee has recommended a debt of 60% rate for the general government combined. 40% rate for the central government, 20% for the state government. Is it true? That is true. The central government has domestic liabilities of 21% of GDP as compared to the 49% of GDP of the state governments. They have toppled the numbers. Central government actually has up to 49% a state governments have lesser. So second statement is wrong as per the constitution of India. It is mandatory for a state to take the central government's consent for raising any loan if the farmer owes any outstanding liabilities to the later. That is also true. So what is the answer? One and three C. With reference to the governance of the public sector banking in India, consider the following statements. Capital infusion in two public sector banks by the government of India has steadily increased in the last decade. Is it true? No. To put the public sector banks in order, the merger of associate banks with the parent state bank of India has been affected. That is true. The answer is B2 only. Consider the following statements. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years. Is it true? It is true. The government does not impose any customs duty on all the imported edible oils as a special case. That is not true. They don't exempt them all the time on all these kinds of words are always troublesome for us. So what will be the answer? One only. One only. Again, tax revenue as a percentage of GDP. How much did we see yesterday? Tax revenue as percentage of GDP. I told you one tax to GDP ratio. 11.7 percentage has steadily increased in the last decade. Can we call it as a steady increase? There were ups and downs. So that's not true. Fiscal deficit as a percentage of GDP of India has steadily increased in the last decade. Is it true? No. Because we saw the fiscal deficit coming up to 3.3 percentage and suddenly went up to 9.2 percentage. Now again coming down to 5.1 percentage. So neither one nor two. Which of the following have occurred in India after its liberalization of economic policies in 1991? Shara of agriculture in GDP increased enormously. You have a very good opinion about it? No. Shara of India's exports in world trade increased. Very peaceful statement. Yes. FDA inflows increased? Yes. After liberalization we got. India's foreign exchange reserves increased enormously? I don't want to say enormously. So what will be the answer? We'll see what answer can we do. First should be ruled out. So A is ruled out. D is ruled out. So we are left to only with 2, 3 and 4. 2 is true. 3 is true. What do you want to answer? 4. We did. Because it's a large period which they are referring to. At the time of 1991 we had very less reserves. Today we have 600 and plus US dollar billion. So we want to agree it as B. I think which we answered already this 19th question. There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? Reducing revenue expenditure. Introducing new welfare schemes. Rationalizing subsidies. Reducing import duty. You want to reduce the deficit. What should you do? We should reduce the revenue expenditure. Yes. If there is no introduction of new welfare schemes you should reduce subsidies, rationalize. If you reduce the import duty more imports will happen. So that's not okay for us. So again the deficit will increase. So 1 and 3 only. I think same question was repeated in UPSC itself. Except for the last option changed. You can see that expanding industries. So again we are going to choose the answer. Reducing the revenue expenditure. Rationalizing the subsidies. But we should not go for expanding industries. Which will again result in increase in the government's expenditure. So the answer will be A. 1 and 3 only. But this has been repeated by the UPSC itself in two different years. Which is why the question has also got repeated here. This is one important understanding required for us. The rate of growth of real GDP has steadily increased in the last decade. Is it true? Real GDP. Again the word steadily. Real GDP we can't say. What we are talking today. This 7 percentage, 5 percentage. That is the data. The second thing is GDP at market prices has steadily increased in the last decade. Yes. No. Obviously yes. There is no other answer to it. It's only for us to understand that. Every year India's GDP is growing at least by a few thousands of crores. Is it not? At least few thousands of money. Compared to the previous year. We didn't get an year where we said that there was a negative growth for a consequence. Though we were discussing about economic recession, depression and other things. Even then India's consumption kept it at least from between 3 percentage to 7 percentage of the growth rate. If you have even 1 percentage growth rate then we are going to call that the GDP at market prices has steadily increased. But the steadily word is again a doubtful word. Last decade. Should we reject both? We reject both. If this is a steadily word is not there. You can actually accept this statement. GDP at market prices has increased in the last decade. Steadyly increased in the last decade. I think you should also agree to this word steadily. Every year on here. See I will tell you a number you can assume by this. 100 becomes 102, 105, 107, 110, 115. The difference or the extent to which it would have expanded could have been different. But it was always increasing. We understand what we are talking, right? It was a stepwise increase. But I wouldn't be able to measure this height of the steps that much only I won't be able to do. But it was an increase. Definitely it was an increase. So maybe we can accept it and say what? 2 is right? No. GDP growth rate has decreased. But we didn't say negative. Whole-style price index would have said negative. Even the CPI would have said close to 2% Today India is earning 100 rupees. Next year India will be earning 98 rupees. That's what my father said in the last 10 years. Last year and also remember one more concept. When we are talking about GDP growth rate. Not at the real concept. Real is not available. I am not getting into this real thing. I am talking about the market prices. I am comparing it only with the previous year. I am not going and comparing myself with the base year. Base year question I directly rejected. The first statement is wrong. I agreed it well. But the second statement every year is India is showing some improvement or not. Yes. One year maybe it is 5%. Another year maybe it is 7%. Another year it may be 3%. Or it may be 4%. But there was an improvement in India's GDP compared to the previous year. Steadyly means if you want the rate to be remaining at 4%, 5%, and if you want to call that as a steady, then the answer is wrong. But if there is an increase compared to the previous year, the answer is right. So now what do we agree? Two can be agreed. If the rate is 2%, 2% and the GDP is... Steady in two ways you can give the interpretation. One is constant. Constant is what? All the 5% age. Steadyly means 2%, 3%, 4%, 5%, 6%, 7%. That is also a steady increase. So which is what is expected here? If we look at it, we are not able to make out very clearly. So what is your interpretation? Do you want to call it as always it is 5% age growth rate as a steady? Or do you want to call it as steady increase means 2%, 3%, 4%, 5%, 6%, 7%. So the second way. So slowly it is increasing. So in the last decade means we should also see in which year this question was asked. 2014. 2014 will answer it as wrong. Sometimes it was reminding the stagnation. Then slowly only it increased. 2014 and now 2004 the growth rate was very good. In 2007-08 the growth rate actually came down. Then again only it started recovering. So let's say neither one nor two. But for the current period. Amritha Kaal. I want to say something. 2014 to 2024. Maybe we can agree for the second point. Politically we can agree to it. With reference to the union budget, which of the following are covered under non-plan expenditure? This is the old data. That's why they are discussing about the plan and the non-plan. But still you can answer. Which of the following are covered under non-plan expenditure? Defense, interest payments, salaries and pensions and subsidies. What is your answer? Only defense. What are these things? Capital expenditure or revenue expenditure? All of these things are capital expenditure? Interest. Interest is what? Salaries, pensions, subsidies, defense expenditure. If it is a maintenance it can be revenue. If it is the original outlay then it is the capital. But for defense also I will tell you. The earlier the classification was kept only under non-plan. Defense, capital also they never kept under planned. What is the convenience of placing it under non-plan? Anytime you can actually increase it. So, defense was a requirement. So, all of these items whether it is capital or it is revenue it was kept under non-plan expenditure. You follow? So, the answer would be 1, 2, 3 and 4. The reference to the balance of payments which of the following constitute capital account? Direct answer. Balance of trade, foreign assets, balance of invisible, special drawing rights. Capital account, current account and capital account. What is there in the current account? Current account, capital account, foreign assets and SDR. So, answer will be 2 and 4. There is no answer. Very good. Probably the question was current account instead of capital. Do I have an answer for the current account? Yes, it is current account. It is not capital account. Let us change the question and answer it as 1 and 3. This is a very generic question. In India deficit financing is used for raising resources for economic development, redemption of public debt, adjusting the balance of payments, reducing the foreign debt. Adjusting the balance of payments with deficit financing. You are combining external sector policy with the fiscal policy. You want to do the redemption of public debt? Reducing the foreign debt. Oh my God. My entire essence of yesterday's class went into waste. You remember we discussed something on the external sector and I told you external debt cannot be paid by GDP. Did I tell you? Because you cannot convert the Indian rupee into dollars easily unless and until you have an economic activity related to it. So, you cannot reduce your foreign debt by borrowing from internally inside the country. Do not assume that you can borrow from one country and give it to another country. Do not go to that international level. So, basically and also we know that deficit financing is something which is depending upon the market borrowings, which is the major thing. With that you will not be able to reduce foreign debt. You will not be able to adjust the balance of payments and all. If you want to say something very indirect then you can attempt all such things because you can say that the government is borrowing then it is doing capital expenditure. Then the exports are increasing therefore you are adjusting the balance of payments. Of course you can say such things but here the answer is economic order. Basically you are promoting what? Capital expenditure which is going to be resulting in your economic development. So, that is the answer given by UPSC. I think this we have already discussed. Which of the following constitute a capital account? Now comes the question on capital account. Foreign loans, FDI, private remittances, portfolio investment. Loans, is it right? Capital account what are the two headings which we know? Current account capital account. Under capital account what are the things which we know? Short term capital account, long term capital account. Under the long term capital account we will have foreign loans, FDI, FPI. What is this? This will come under current account, services account, transfers, unilateral transfers. So, this is the foreign private remittances. So, this is a current account variable. So, you have to answer it as 1, 2, 1, 4. What is that in the short term capital account then? What are all the FDs which are coming from the NRI people? That will be placed under the short term capital account. What is our answer? 1, 2, 1, 4, B. This is a very static database to question. Right? So, in India in the overall index of industrial production the indices of 8, 4 industries have a combined weight of the 7.9 percentage. Which of the following are among those 8, 4 industries? 1 to 4. So, you need to memorize the data about index of industrial production which will help you to answer it. So, let us see. Which of the following measures would result in an increase in the money supply in the economy? What should you do? Purchase of government securities from the public by the central bank. Deposit of currency in the commercial banks by the people. Borrowing by the government from the central bank. Sale of government securities to the public by the central bank. Purchase of government securities. Purchase of government securities. If I am the government, I purchase all the government securities back from you. I will be giving you money. So, that will increase in the money supply. If you people come and deposit the currency in the bank. Then money will not be there with you. That is not the answer. Borrowing by the government from the central bank RBI. Obviously, it will come and channel it out to the people. So, so far we have a say in 1 and 3. Sale of government securities is not an answer because if I sell again, I will take money from you. So, the question is increase in the money supply. So, the answer is only 1 and 3. This is a earlier year question. What are the recent policy initiatives of government of India to promote the growth of manufacturing sector? NIM is at an all its older concepts. Of course, it was there providing the benefit of single window clearance which helped them very much. Establishing the technology acquisition and development fund. So, the answer was all D. All the three were helping to improve the manufacturing sector. In India, which of the following have the highest share in the disbursement of credit to agriculture and allied activities? Scheduled to commercial banks, that's right. Why are we not choosing cooperative banks and regional rural banks? The total amount what they will be able to mobilize as a deposits will be much lesser than the commercial banks. Though they both are supposed to be giving the money only to the agriculture sector, mostly to the agriculture sector. They won't be able to mobilize as much money as the scheduled commercial banks do. And how do the scheduled commercial banks give money to the agriculture sector? I need one word. Priority sector lending. So, there is a norm given by RBA that you must give some percentage of your credit, 18% to the agriculture. Consider the following actions which the government can take. Devaluing the domestic currency. Devaluation will result in what? Usually promotion of what? Troubling of what? The moment you hear the word devaluation of domestic currency, it will result in promotion of exports and hurting the imports. Reduction in the export subsidy. Adopting suitable policies which attract a greater FDI and more funds from FIIs. Which of the above actions can help in reducing current account deficit? One will definitely help because it's going to promote exports and it will be helping to reduce the deficit. Should we reduce the export subsidy? No, we shouldn't do that. Adopting suitable policies which attract greater FDI and more funds from FIIs. Will it help us to reduce the current account deficit? There are two types of answers to it. What do you want to answer? I don't have an answer called as one only. So, one and three. Why one and three? I am agreeing here because when you get in more FDI, you will be able to produce more commodities and go ahead for export promotion or import substitution where all the key words, is it not? Export promotion or import substitution. When you do both of these things, current account deficit will come under control. Mathematically, if you ask me FDI, FIIs increasing, will it increase current account deficit? I will answer directly yes. Why? If you don't do export promotions, if you don't do import substitution, your inflows of FDI assume that everything you are domestically consuming. That is also good because import substitution happens but it has to happen. If it is not going on well, the unit came inside India but it didn't perform. Anything of such sort will be a problem because you have to give back whatever amount you had taken in the form of the investments under the services account of your current account. So, when you are bringing in FDI, you have to give back the profits over there. When you are bringing in FIA, you have to pay back the dividends through the services account under the current account. So, mathematically, this kind of larger FDIs may result in the expansion of the current account deficit but we have to make use of the FDI and FIA in such a way that we are able to do the export promotion or the import substitution. The context of Indian economy, consider the following statements. The growth rate of GDP has steadily increased in the last five years. Again, we are getting into trouble with the word steadily. The growth rate in per capita income has steadily increased in the last five years. Do you want to agree? Either one. Either one not. India has experienced persistent and high food inflation in the recent past. What would be the reasons? First one, due to a gradual switch over to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30%. Is it true? 30% and all it didn't shrink. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change. Is it true? Yes, people are wanting more different taste. The food supply chain has structural constraints. Is it true? It is true. So, two and three. So, the answer will be B. So, these are the questions which we thought we will discuss today. I will post both the folders into the group. So, though we wanted to do the discussion only with the public finance and the budget, we can see that we have gone a bit of spillover with our external sector which are all getting connected with the government in the questions we brought in all such questions. Almost 60 questions today we were able to look at and then at least half of it we can answer directly. Some of them we may take some time to think through and then we will be able to answer. But it will give you at least one idea. They ask you trends in the fiscal deficit, revenue deficit, GDP, per capita income, all these macroeconomic indicators. So, have a look at the data, remember the trends and then go for the exam. The other thing is they can ask you anything about the schemes, anything which is related to the current affairs. So, please be very thorough with that Amrith Kaal related strategy. Any time they can ask you a question upon it, the Saptarishi and all such things. Atman Nirbhaar Bharat. So, all the stalwart programs of the government you have to be very, very thorough with. Other than that, schemes related questions I didn't bring it inside this. It is all only mostly factual which you may have to remember and write. But GDP, trends, patterns, per capita income, trends, pattern, deficit concepts, trends and patterns. Also, we wrote one yesterday on descending order of our tax revenue receipts, starting from income tax, then the GST, then the corporate profit tax. So, we had an order, so that also had been asked in several years in the previous time with a decreasing order, increasing order like that they will ask questions. So, these are the possible ways how they can be answered. I hope this will be useful for you to take it forward as a revision for the questions. And next week we are having this exam based on whatever we have studied so far. We are also seeing the questions how it would be. So, those who are part of our classroom program, you will have the exam on 11. Those who are not part of the classroom program, you will have the exam on 9 because there is a pre-fit program coming from 11th onwards or in the subsequent week. So, we want to give some scholarship to the students who are doing very well in the budget. So, there will be 100 questions only upon the budget, whatever we have studied in the class so far. I will share the PPT also in the whatever group we have telegram groups. And these documents will also be shared. The questions today what we discussed will also be shared. So, the examination will be there in the subsequent week. Scholarship will be given to the outside students. You can all make use of the opportunity to get thorough with the budget. And regarding the pre-fit, if you are all GSPCM students, some of you wanted to come and write here directly. Whereas B were suggesting it to write it through the online mode. Online mode could be easier. Why we thought I will tell you the rationale. Different batches are writing the pre-storming in the different dates. Assume that you are a batch one and two and you are coming on Monday morning to write it. Monday early morning either you will have to write the pre-fit coming here or in the afternoon. So, you will write the pre-storming, you will attend the discussion, you will write the pre-fit, you will attend the discussion. When will you go home and study for yourself? So, we were having all these concerns every single day for you. It is one day. For us it will be like every single day we will be dealing with batch after batch of students with giving with the pre-fit. The idea is not to say no, mainly because the pre-storming which has started already from like a month ago or so for many of you from December for some of you. You may be reading history for tomorrow's pre-storming test. Whereas the pre-fit will start with the geography. So, there will be a difference in the subjects for the preparation also. So, you have to plan everything judiciously and rationally. The time left with us is very less. So, instead of like thinking that you have to come here and write for pre-fit in the afternoon, pre-fit is again is a daily exercise. It is not a thing like where you can plan and sit and study for a week and then write the pre-storming. So, it is really a daily exercise. You have to run on your heel if you want to be properly writing the pre-fit every single day without missing. It has its own advantages. But you along with doing with the sessions and then writing the pre-storm and then preparing the current affairs some of you may be still in CSAT, some of you may be still in the optional. We would suggest you to go for online pre-fit. That's my suggestion. But still we have kept the two to five slot in the afternoon so open for you people to come and write the pre-fit. But save your time, save your energy. Rationalize your time at the best and then do the exam preparation. Now, if you are online, I will go and see you in an instant. If you are online, then yes. Then, I will ask you a question. The question paper will make it available for you people in case if it is required. We will make the portal available for GSPCM students. Don't worry about the question paper availability. That is a worry. Definitely, we will address the concern. Because it will impose a discipline. You are supposed to write between 7 to 8, you write it. That's all. You won't be able to rewrite the examination. That much we can block. But we can make the question paper available to you. You won't be able to answer, but you can see the question paper. That we can do. You want to ask something. You want the question paper. People have told me that online is better. Yes. But for yourself. It's a daily way. But how are we going to do it? Actually, we are not in a mode to offer you both. That also we didn't think. Pre storming itself will give you a lot of pressure. Because every week you have a plan to prepare a particular syllabus. You will be having a sequence in which it is going. History one, history two, full history, geography one, geography two, full geography like that. You have a sequence in which it is going. But prefiter for the students who studied with us in the last year. They would have completed the course. They want to come and revise every day. They want to have a 60 day package in which they want to do it. But it is that we didn't want to exclude you people also. You may be thinking I also want to do it online. I also want to do it every day. So we are offering it to you. It is not a compulsory thing that you must write. If you are comfortable with it. If it is not putting pressure on you. If you think you are getting some benefit out of it. I'm talking my heart out. I don't want to put much pressure because this is an examination period. We have to plan our time judicially. We are doing 10 things at a time. We know what are our strengths, what are our weaknesses. Some people will be good in geography. Some people will be very weak in history. So you have to see where you are good at and where you have to strengthen. If you want to write the prefiter only for the history and then strengthen yourself, you write no. We are not asking you to do every single day thing. All the resources are at your disposal. We are giving you pre-storming. We are giving you prefit. Everything is open for you. We are giving you a lot of entire resources. But don't put the pressure on yourself that you have to do only this, that or both. And then wonder like at the end of the evening, I don't have time to study. So accordingly you plan. Pre-fit is given to you online. Enjoy the examination when you have time. Evening time or whichever they are getting. In the online they will keep it for one full day open. If you come offline, they will give you only a few hours open. They will give you a particular time. So then you have to travel from your home and come here in the particular train. Already you would have come for the class in the morning. Again you go back, you again you come for the test. This is not a weekly affair, every day affair. So you have to be here all five days in the afternoon. So you decide, it is your wish. We are not restricting you from doing anything. We are wanting you to do more. As many questions as you are doing, the more confidence you will get. And the question paper is going to look at another revision paper. That is what we want you to have the feeling. You should never have any less confidence when you get into UPSC. Whatever we prepare today, UPSC will give its surprise on the day. Whatever, however much. But what we can train you towards is the level of confidence. You have studied everything, current affairs, static part, everything. You have done so many questions. So on the day of the examination you will have a feel, ok, I have studied. I will write. So in the question paper, 25 to 30 questions you will attempt directly. First all of the things are going to be only this experience which you gathered in doing the answers. Beyond 30 questions, you won't be able to attempt anything directly. After that it is only your accumulation of knowledge, experience or sharing. One-one question wherever you have attempted in any subject, other than logic in your subject to help and approve it. It is only going to be interlinkage of the subjects over there. That is why we are saying you work according to your convenience. There is no doubt and no question. We are offering you all types of exams. But you rationalize. This is what we want to tell from our side. So do the exam in the next week. At least to see how many questions we are able to do it. You just do it. Don't worry about anything. Through the question paper if you are learning 2-3 more questions, well and good. Why are we doing this previous question? Some years UPSC did toe copies and paste. You saw that expanding industries question, right? Similarly, very similarly. So you will be very familiar with the questions. Reading the yes questions or not questions. So they are all coming only by training into your mind. That's why we always say the key of the answer. Though you don't know anything in economics also. You'll be still able to answer at least 5 questions in the question paper. What we gave today to a common man also if you give. That's because that is the charm of UPSC. Looking at the question with some kind of a common sense in the logic. You will still be able to answer it correctly. So it is a collective knowledge. Common sense, rationality, everything put together. It is your inner character. It is not just your knowledge. So train your character to get accustomed to the UPSC question paper. That's what we are doing repeated, right? Thank you everyone. Good day.