UPSC Prelims Practice Questions — Kerala’s fiscal worries

Q1. With reference to the Government of Kerala's Budget for 2025-26, consider the following: 1. Fiscal deficit estimated at 3.2% of GSDP. 2. Revenue deficit estimated at 1.9% of GSDP. 3. Outstanding liabilities (Revised Estimates) at about 34% of GSDP. 4. Total expenditure projected to fall by 11% over the Revised Estimates of 2024-25. Which of the above is/are correctly identified?

  1. Fiscal deficit estimated at 3.2% of GSDP.
  2. Revenue deficit estimated at 1.9% of GSDP.
  3. Outstanding liabilities (Revised Estimates) at about 34% of GSDP.
  4. Total expenditure projected to fall by 11% over the Revised Estimates of 2024-25.
  • A. 1 and 2 only
  • B. 1, 2 and 3 only
  • C. 3 and 4 only
  • D. 1, 2, 3 and 4

Q2. According to the White Paper on Kerala's fiscal health tabled in June 2026 by Chief Minister V.D. Satheesan, for approximately how many days in 2025 did the State remain in emergency borrowing mode (resorting to Ways and Means Advances/Special Drawing Facility from the RBI) to meet routine expenditure?

  • A. 84 days
  • B. 162 days
  • C. 262 days
  • D. Throughout the financial year (365 days)

Q3. In the context of borrowings raised by the Kerala Infrastructure Investment Fund Board (KIIFB), the term 'Masala Bonds' refers to:

  • A. Rupee-denominated bonds issued in offshore markets by Indian entities to raise foreign capital, with the currency risk borne by the investor
  • B. US dollar-denominated sovereign bonds issued by the Government of India in international markets
  • C. Tax-free infrastructure bonds issued to Indian retail investors under Section 80CCF of the Income-tax Act
  • D. State Development Loans (SDLs) auctioned by the Reserve Bank of India on behalf of State Governments

Q4. With reference to Kerala's Budget Estimates for 2025-26 as compared to the Revised Estimates for 2024-25, consider the following statements: 1. The fiscal deficit, as a percentage of GSDP, is estimated to decline from 3.5% to 3.2%. 2. The revenue deficit, as a percentage of GSDP, is estimated to widen from 1.9% to 2.3%. 3. The outstanding liabilities-to-GSDP ratio is estimated to fall below 30% in 2025-26. Which of the statements given above is/are correct?

  1. The fiscal deficit, as a percentage of GSDP, is estimated to decline from 3.5% to 3.2%.
  2. The revenue deficit, as a percentage of GSDP, is estimated to widen from 1.9% to 2.3%.
  3. The outstanding liabilities-to-GSDP ratio is estimated to fall below 30% in 2025-26.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q5. Which one of the following is the nodal department of the Government of Kerala administratively responsible for the Kerala Infrastructure Investment Fund Board (KIIFB)?

  • A. Finance Department
  • B. Planning and Economic Affairs Department
  • C. Industries and Commerce Department
  • D. Public Works Department