UPSC Prelims Practice Questions — States with revenue deficits may face fiscal stress: Centre

Q1. In the context of Union and State public finance in India, the term 'Revenue Deficit' refers to which one of the following?

  • A. The excess of total expenditure over total receipts excluding borrowings
  • B. The excess of revenue expenditure over revenue receipts in a given fiscal year
  • C. The excess of fiscal deficit over net interest payments
  • D. The excess of capital expenditure over capital receipts including disinvestment proceeds

Q2. With reference to the assessment of revenue-deficit States in the Union Finance Ministry's Monthly Economic Review for April 2026 as compared to earlier fiscal years, consider the following statements: 1. The number of large States projected to be in revenue deficit fell from 11 at the 2024-25 budget stage to 9 at the 2026-27 budget stage. 2. The aggregate outstanding liabilities of States, at about 27.5% of GDP as of March 2025, were above the 20% ceiling recommended by the FRBM Review Committee. 3. Tamil Nadu and West Bengal were included in the 18-State sample analysed for 2026-27. Which of the statements given above is/are correct?

  1. The number of large States projected to be in revenue deficit fell from 11 at the 2024-25 budget stage to 9 at the 2026-27 budget stage.
  2. The aggregate outstanding liabilities of States, at about 27.5% of GDP as of March 2025, were above the 20% ceiling recommended by the FRBM Review Committee.
  3. Tamil Nadu and West Bengal were included in the 18-State sample analysed for 2026-27.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q3. The progressive reduction of revenue and fiscal deficits by the Union Government, and the framework that inspired analogous Fiscal Responsibility Legislations at the State level, is mandated under which one of the following statutes?

  • A. Public Debt Act, 1944
  • B. Reserve Bank of India Act, 1934
  • C. Fiscal Responsibility and Budget Management Act, 2003
  • D. Government Securities Act, 2006

Q4. The FRBM Review Committee, whose report recommended a combined debt-to-GDP ceiling of 60% with a 20% sub-ceiling for the States, was chaired by which one of the following?

  • A. Vijay L. Kelkar
  • B. Bimal Jalan
  • C. Y.V. Reddy
  • D. N.K. Singh
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