STD 10 Social Science II: Chapter 05 Public Expenditure and Public Revenue - Questions and Answers

Study Notes for Class 10th Social Science II (English Medium) പൊതുചെലവും പൊതുവരുമാനവും | Economics: Chapter 05 Public Expenditure and Public Revenue

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Class 10 Chapter 05 Public Expenditure and Public Revenue
1. what is public expenditure?
- The expenditure incurred by the government is known as public expenditure.

2. Observe the pictures given above. They are related to certain activities performed by the government. What are they? Find out other activities of the government.
- Distribution of drinking water
- Distribution of welfare pension
- Protection of the environment
- Protection of the country
- Law and Order
- Road construction
- Public Distribution system
- Health centres
- Protection of Women and children

3. Given below is the graph showing the public expenditure of India from 2010-11 to 2016-17. Observe the graph and find out the annual increase in public expenditure.
- The public expenditure for the year 2010-ll was 1197328 Crore. In the year 2011-12, it increased by 107037 Crore and became 130463 Crore. In 2012-13 it increased by 106007 Crore and became 141037 Crore. In 2013 -14, it increased by 149075 Crore and became 1559447 Crore.
In 2014-15 the public expenditure increased by 121711 Crore and became 1681158 Crore. In 2015-16 the public expenditure increased by 96319 Crores and became 1777477 Crores. In 2016-17 the public expenditure increased by 197717 Crores and became 1975194 Crores.

4. Compare developmental and non -develop-mental expenditure and give examples for each.
Public expenditure can be classified into developmental and non-developmental expenditure. 
Developmental expenditure- The expenditure incurred by the government for constructing roads bridges and harbour, starting up new enterprises, setting up the educational institution and hospital are considered as a developmental expenditure.
non-developmental expenditure- the expenditure of govt for war, interest, pension etc are considered as a non-developmental expenditure.

5. Why does India's public expenditure increase?
- Population growth
- Urbanisation
- Welfare activities
- Increase in the defence expenditure
- Infectious Diseases
- Natural Calamity
- Inflation
- Sudden wars
- Democracy 

6. Discuss how these factors lead to an increase in public expenditure and make inferences.
- As population increases, facilities for education, health, shelter, etc. have to be provided for more people. For this, the government has to spend more money. Government undertakes welfare activities in the form of education, health, infrastructure, food, urbanization which leads to an increase in public expenditure automatically. Natural calamities make more expenditures and unemployment also rise the expenditure that is to control unemployment and to attain economic, development industrialization must be encouraged. Thus starting new industries and protecting industries increase Public expenditure. 

7. What is public revenue?
The income of the government is known as public revenue. The government earns income primarily from two sources. They are tax revenue and non-tax revenue. 

8. What in Taxes?
Taxes are the main source of income for the government. Tax is a compulsory payment to the government made by the public for meeting expenditure towards welfare activities, developmental activities etc. The person who pays tax is called the taxpayer. Tax revenue is of two types: Direct tax and indirect tax.

9. What is the differences between Direct tax and Indirect tax?
Direct Tax:
- Tax is paid by the person on whom it is imposed
- The tax burden is felt by the taxpayer
- Comparatively, high expenditure is incurred for tax collection. 
Indirect Tax:
- Tax is imposed on one person and paid by another
- The tax burden is not felt by the taxpayer
- Comparatively, low expenditure is incurred for tax collection.

10. Can you identify the receipt given? Where do we remit land tax? (Textbook page no. 75)
- Land tax remitted receipt.
- Land tax will remit at their own village offices

11. How does personal income tax differs from corporate income tax?
- Personal income tax – It is the tax imposed on the income of individuals. The rate of tax increases as the income increases. Income tax is applicable to the income that is above a certain limit.
- Corporate tax – It is the tax imposed on the net income or profit of a
company

12. Some direct taxes are given below. Classify them into taxes imposed by Central Government, State government and local self-government.
(Corporate tax, Land tax, Professional tax, Stamp duty, Property tax, Personal income tax.)
- Central Government - Corporate Tax and Personal Income Tax
- State Government - Land Tax and Stamp Duty
- Local Self Government – Professional Tax and Property Tax

13. Write the important non-tax revenue and explain?
- Fees, fines and penalties, grants, interest and profit are the various sources of non-tax revenue.
Fees
Fees are the reward collected for the government's services. License fees, registration fees, tuition fees, etc. are examples.
Fines and penalties
Fines and penalties are punishments for violating the laws.
Grants
Grants are the financial aid provided by one government or organisations for meeting a specific objective. For example, grants are provided by central and state governments to local self-government.
Interest
Government receive interest for loans given to various enterprises, agencies and countries.
Profit
Profit is the net income received from the enterprises operated by the government. For example, profit from the Indian Railways.

14. Discuss whether direct or indirect tax seriously affects common people.
(Hints – Tax burden, rise price, income inequality.)
- In direct taxpayer bears the burden himself. So the taxpayer knew the burden of the tax. But indirect tax is collected by raising the price of commodities. The taxpayer is ignorant of the tax. Evading a tax means giving up the wants. 
Direct tax is based on the principle of the ability to pay. But the indirect tax will not ensure social justice as it falls upon the rich and to poor alike. The rate of increase in indirect tax may cause an increase in the price of commodities. Thus we can assess that indirect tax affects the common man more public debt.

15. Goods and Services Tax (GST)
- Goods and Services Tax (GST) was introduced in India on 1st July 2017 merging different indirect taxes imposed by central and state governments.  Taxes are levied at different stages starting from production to final consumption of goods and services. 

16. The major taxes merged into GST
• Central excise duty
• Service taxes
• Central sale tax
• State value-added tax
• Luxury tax
• Advertisement tax
• Octroi
• Entertainment tax 

17. What are the different types of goods and services taxes?
- Central GST (CGST):- The Central GST is the GST levied by the Central Government on goods and services traded within the State.
- State GST (SGST):- In-State Purchasing The GST levied by the State Government on goods and services rendered is referred to as the State GST. 
- Integrated GST (IGST):- The GST on interstate trade is imposed and collected by the central government. This is known as Integrated GST (IGST). The share of the state government on IGST is given by the Central government. 

18. Items that do not come under GST at present?
Petroleum products, electricity, liquor do not come under GST. The existing
the indirect tax system will continue on these items.

19. What are the important functions of the GST council ?
- Taxes, cess and surcharges are to be merged into GST.
- The goods and services that are to be brought under GST.
- Determining GST rates.
- The time frame for including the excluded items into GST.
- Determining the tax exemption limit on the basis of total turnover.

20. Write down four basic information you can find in a GST bill.
- GST Registration Number
- Various tax rates
- Items that are not GST imposed
- Information about the institution.

21. How do the Center and States share the CGST, SGST and IGST tax allocations?
- CGST and SGST taxes are extracted from consumers and split equally between Center and State.
- The State's share in IGST is given by the Central Government.
 

22. According to the current structure, who is the Chairman of the GST Committee?
- Union Finance Minister

23. List out current GST rates in India?
- 5%, 12%, 18% and 28%

24. Which tax is imposed on inter-state transactions?
- Integrated GST (IGST)

25. Differentiate ‘Surcharge and ‘Cess’
- Additional tax imposed on tax is called a surcharge. Generally, the surcharge is imposed for a specific period. Additional tax is imposed by the government for certain specific purposes is called Cess. Cess will be discontinued when enough money is received. Education cess on income tax is an example. 

26. The names of different types of taxes are given below. Categorize them, and fill the tables.
Land tax, Corporate tax, Integrated GST, Personal income tax, Union excise duty, Stamp duty, Property tax, Professional tax, State GST, Central GST

27. What is public debt? Write two types of public debt?
- The loans taken by the government is called public debt. Internal debt and external debt are the two kinds of public debt.

28. Distinguish between Internal debt and external debt
internal debt:- The loans availed by the government from individuals and institution with in the country.
External debt:- The loans availed from foreign governments and international institutions.

29. What is the reason for the increase in Indian public debt?
- Increased defence expenditure.
- Expense on educator and another service. 
- Social welfare activities
- Developmental activities
- Urbanization
- Increase in import
- Unemployment benefit
- Expenses for periodic elections.
- To meet loss caused by natural calamities.

30. Calculate the annual per capita debt of India.
- We get annual per capita debt of India by dividing total debt of a year with a population of the year. According to the 2011 population census our population is 1, 21, 01, 93, 422.
Public debt of 2015 = 5, 50, 36, 75
Per capita debt = 1, 21, 01, 93, 422 – 5503675
= 00, 45, 47, 76 crores

31. Statistics shows that India’s public debt is increasing. Discuss the advantages and disadvantages of this and report the findings?
- Underdevelopment and increase in population results increase of public debt. If the public debt is increased, a major portion of the public income will be allocated to interest and repayment. As a result allotment to welfare schemes will below and it adversely affects the economic development of a country.

32. What is Public finance?
Public finance is the branch of economics that relates to public income, public expenditure and public debt. Public finance is presented through the budget.

33. What is ‘budget’? Which are its three types?
- Budget is the financial statement showing the expected income and expenditure of the government during a financial year. Three types of budget are Balanced Budget, Surplus Budget, Deficit budget.

34. What is fiscal policy? Explain its aims.
- Government policy regarding public revenue, public expenditure and public debt are called fiscal policy.
There are various aims of fiscal policy.
* Attain Economic stability
* Create employment opportunities
* Controls unnecessary expenditure
* It helps to maintain price stability
* For efficient resource allocation. 

35. How the fiscal policy controls inflation and deflation which affect economic security?
- Fiscal policy controls inflation and deflation which affect economic security. The tax rate is increased when there is inflation. As a result of this, the purchasing power of the people falls. Similarly, tax is reduced at the time of deflation. That will increase the purchasing power of the people. As a result the demand for products increases. This results in an increase in the price of the products. The timely application of fiscal policy helps the government to over-come such situations.

36. Public finance and fiscal policy determines a country’s progress. Substantiate.
- Public finance and fiscal policy determines a country’s progress. Public finance is the branch of economics that relates to public income, public expenditure and public debt. It is presented through the budget. Fiscal policy is the government policy regarding public revenue, public expenditure and public debt.
These policies are implemented through the budget. Fiscal policy influences countries progress. A sound fiscal policy helps in nourishing the developmental activities and to attain growth.
Fiscal policy controls inflation and deflation which affect economic security. The tax rate is increased when there is inflation. As a result of this, the purchasing power of the people falls. Similarly, tax is reduced at the time of deflation. That will increase the purchasing power of the people. As a result the demand for products increases. This results in an increase in the price of the products. The timely application of fiscal policy helps the government to over-come such situations.

37. Analyse the diagram and answer the following questions
1. From which tax does the government get the most revenue?
2. How much income does the government receive from income tax?
3. What is the total revenue from GST, customs duty and excise duty?
Answer: 
1. Corporate Tax (Rs. 563744.73 crores)
2. 441255.27 crores
3. 856868 crores

38. Observe the table and answer the following questions.
1. How much has the public debt increased in 2017-18 compared to 2013-14?
2. How much has the domestic debt increased in 2017-18 compared to 2012-13?
3. Which year the country recorded the lowest growth in external debt?
Answer:
1. 2179578 crores
2. 2415571 crore
3. Financial year 2012-2013

39. The table lists the hypothetical budget data for some years of a country. Observe the list and answer the following questions.

1. 2015-16 
2. 2013-14 
3. 2013-14 - Surplus Budget
2014-15 - Balanced Budget
2015-16 - Deficit budget  

40. Which among the following is the financial year in India.
(January 1st to December 31st,
June 1st to May 31st;
March 1st to February 28th
April 1st to March 31st)
Answer.
April 1st to March 31st

41. Correct the false statements given below.
Deficit Budget - Income = Expenditure
Surplus budget - income < expenditure
Balanced Budget - Income> Expenditure
Answer:
Deficit Budget - Income <Expenditure
Surplus Budget - Income> Expenditure
Balanced Budget - Income = Expenditure

42. How does an increase in population increases the government expenditure?
- As population increases, facilities for education, health, shelter, etc. have to be provided for more people. The government has to spend more money on such facilities.

43. what are the features of a surplus budget and deficit budget.
- Surplus Budget:- income is more than expenditure.
- Deficit Budget:- expenditure is more than income.

44. How can we control inflation and deflation through Fiscal Policy?
1. Increasing taxes during inflation reduces people's purchasing power.
Price decreases with the decrease in purchase
2. Reducing taxes during deflation, increase the purchasing power of people. Price increases with the increase in the purchase.

45. What are the two main sources of public revenue?
1. Tax Revenue
2. Non-tax revenue

46. The government servants in a Panchayat area pay tax to the Panchayat. Which type of tax is this?
- This is a professional tax

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