Aspirant Academy

Economy

Predicted Questions with Model Answers

State Budget and Fiscal Management

Paper I · Unit 2 Section 15 of 16 0 PYQs 39 min
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Predicted Questions with Model Answers

Q1 (5 marks — 50 words)

What is Rajasthan's fiscal deficit in 2023-24 as a percentage of GSDP and how does it compare with the FRBM target?

Model Answer (EN): Rajasthan's fiscal deficit in 2023-24 was ₹65,580 crore, equal to 4.31% of GSDP — exceeding the FRBM target of 3% set under the Rajasthan Fiscal Responsibility and Budget Management Act, 2005. Key drivers include committed expenditure (salaries, pensions, interest) consuming ~60% of revenue expenditure.

Q2 (5 marks — 50 words)

Explain the composition of Rajasthan's Own Tax Revenue and its growth trends in 2023-24.

Model Answer (EN): Rajasthan's Own Tax Revenue in 2023-24 was ₹94,086 crore. SGST (state share) grew 12.50%, Stamps and Registration grew 12.12%, Excise and Vehicle Tax also expanded. Non-tax revenue includes mining royalties and IGNP water charges. Own tax revenue is supplemented by central transfers (15th Finance Commission devolution).

Q3 (5 marks — 50 words)

What is Rajasthan's total fiscal liabilities position in 2023-24 and why does it raise debt sustainability concerns?

Model Answer (EN): Rajasthan's total fiscal liabilities (debt) reached ₹5,71,639 crore in 2023-24, equal to 37.57% of GSDP — above the FRBM debt ceiling of 35%. Sustained revenue deficits require borrowings, compounding interest obligations. The World Bank's SPFM project (US$31 million) supports structural fiscal reforms to restore debt sustainability.

Q4 (5 marks — 50 words)

What is the role of the 6th State Finance Commission (SFC) in Rajasthan's fiscal devolution to local bodies?

Model Answer (EN): The 6th State Finance Commission covers 2020-21 to 2024-25, recommending devolution to Panchayati Raj Institutions and Urban Local Bodies under Articles 243-I and 243-Y. In 2024-25, ₹621.07 crore was transferred, funding 37,394 works. The fund distribution ratio is GP:PS:ZP = 75:20:5.

Q5 (10 marks — 150 words)

Examine the key features and fiscal implications of Rajasthan Budget 2025-26. How does it balance welfare commitments with capital expenditure under Viksit Rajasthan 2047?

Model Answer (EN): Rajasthan Budget 2025-26, presented on February 19, 2025 by Deputy CM Diya Kumari, carries a total modified outlay of ₹2,09,633.99 crore — the largest in the state's history. Revenue receipts in 2023-24 stood at ₹2,03,276 crore, with only 75.49% of total expenditure covered through revenue receipts.

Welfare commitments creating expenditure pressure include: Lado Protsahan Yojana (conditional cash for girl children), Mukhyamantri Yuva Swarojgar Yojana (100% interest subsidy on ₹10 lakh loans), VYUPY (₹150 crore corpus, 8-9% interest subsidy), and Rajasthan Diwas welfare package (₹375 crore to women across 11 schemes).

Capital outlay in 2023-24 was ₹26,646 crore — a 34.6% increase — driven by infrastructure under Viksit Rajasthan 2047. Developmental expenditure reached ₹1,91,190 crore (71% of total). However, committed expenditure (salaries, pensions, interest) consumes ~60% of revenue expenditure, creating a structural tension between welfare and capital allocation.

FRBM compliance remains a challenge: fiscal deficit at 4.31% of GSDP vs. the 3% target; debt at 37.57% vs. 35% ceiling. The SPFM project (World Bank, US$31 million) aims to strengthen fiscal management systems.