UPSC Prelims Practice Questions — SUMMARY OF UNION BUDGET 2026-27

Q1. In the fiscal consolidation framework adopted in the Union Budget 2026-27, which one of the following serves as the operational (operative) target, while the debt-to-GDP ratio functions as the medium-term anchor to be brought to 50±1% by FY 2030-31?

  • A. Fiscal deficit
  • B. Revenue deficit
  • C. Primary deficit
  • D. Effective revenue deficit

Q2. With reference to the fiscal parameters of the Union Budget 2026-27, consider the following statements: 1. The fiscal deficit in BE 2026-27 is estimated at 4.3% of GDP. 2. The debt-to-GDP ratio in BE 2026-27 is estimated at 55.6%. 3. The medium-term debt-to-GDP anchor is 50±1%, to be reached by FY 2030-31. 4. The net market borrowing from dated securities for 2026-27 is estimated at ₹17.2 lakh crore. Which of the statements given above is/are NOT correct?

  1. The fiscal deficit in BE 2026-27 is estimated at 4.3% of GDP.
  2. The debt-to-GDP ratio in BE 2026-27 is estimated at 55.6%.
  3. The medium-term debt-to-GDP anchor is 50±1%, to be reached by FY 2030-31.
  4. The net market borrowing from dated securities for 2026-27 is estimated at ₹17.2 lakh crore.
  • A. 1 and 2
  • B. 2 and 3
  • C. 3 only
  • D. 4 only

Q3. The Union Budget 2026-27, like every Annual Financial Statement, is compiled by the Budget Division housed under which one of the following departments of the Ministry of Finance?

  • A. Department of Economic Affairs
  • B. Department of Revenue
  • C. Department of Expenditure
  • D. Department of Financial Services

Q4. In the Union Budget 2026-27, the term 'effective capital expenditure' (estimated at ₹17.15 lakh crore, or 4.4% of GDP) is best defined as:

  • A. The Union government's capital expenditure plus grants-in-aid to States/others for creation of capital assets
  • B. Capital expenditure minus loans repaid by States to the Centre
  • C. Total capital receipts less total capital disbursements
  • D. Capital expenditure plus interest payments on dated securities

Q5. The new Income Tax Act, 2025 (effective 1 April 2026) introduces, as its lead conceptual simplification, a single unified term that replaces an older one used in the Income Tax Act, 1961. Which one of the following correctly states this change?

  • A. 'Tax year' replaces 'previous year'
  • B. 'Assessment year' replaces 'financial year'
  • C. 'Fiscal year' replaces 'accounting year'
  • D. 'Charge year' replaces 'assessment year'

Q6. The administration and implementation of the new Income Tax Act, 2025 rests with which one of the following bodies under the Ministry of Finance?

  • A. Central Board of Direct Taxes (CBDT)
  • B. Central Board of Indirect Taxes and Customs (CBIC)
  • C. Department of Financial Services
  • D. Financial Intelligence Unit–India (FIU-IND)

Q7. With reference to how the Union Budget 2026-27 relates to its predecessor and stated framing, consider the following statements: 1. It is presented as a 'Yuva Shakti-driven' Budget drawing on ideas from the Viksit Bharat Young Leaders Dialogue 2026. 2. It is organised around three Kartavyas, the third of which is aligned with 'Sabka Sath, Sabka Vikas'. 3. Departing from Budget 2025-26, it discards the debt-to-GDP glide path in favour of a fiscal-deficit-only anchor. Which of the statements given above is/are correct?

  1. It is presented as a 'Yuva Shakti-driven' Budget drawing on ideas from the Viksit Bharat Young Leaders Dialogue 2026.
  2. It is organised around three Kartavyas, the third of which is aligned with 'Sabka Sath, Sabka Vikas'.
  3. Departing from Budget 2025-26, it discards the debt-to-GDP glide path in favour of a fiscal-deficit-only anchor.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q8. Continuing the roughly six-fold rise in public capital expenditure since FY 2014-15, the capital expenditure provided in the Union Budget 2026-27 (BE) — the highest in the series — stands closest to:

  • A. ₹12.2 lakh crore
  • B. ₹17.15 lakh crore
  • C. ₹11.7 lakh crore
  • D. ₹2 lakh crore

Q9. With reference to capital expenditure in the Union Budget 2026-27, consider the following statements: 1. The capital expenditure in BE 2026-27 is ₹12.2 lakh crore. 2. The effective capital expenditure in FY 2026-27 is estimated at ₹17.15 lakh crore. 3. The grants-in-aid for creation of capital assets in BE 2026-27 is estimated at ₹11.7 lakh crore. 4. Public capital expenditure has risen from about ₹2 lakh crore in FY 2014-15. Which of the statements given above is/are NOT correct?

  1. The capital expenditure in BE 2026-27 is ₹12.2 lakh crore.
  2. The effective capital expenditure in FY 2026-27 is estimated at ₹17.15 lakh crore.
  3. The grants-in-aid for creation of capital assets in BE 2026-27 is estimated at ₹11.7 lakh crore.
  4. Public capital expenditure has risen from about ₹2 lakh crore in FY 2014-15.
  • A. 1 only
  • B. 3 only
  • C. 2 and 4
  • D. 1 and 3

Q10. The Union Budget 2026-27 highlights the role of MSMEs as engines of growth. Consider the following statements: 1. MSMEs account for about 60% of India's exports. 2. MSMEs contribute about 31.1% of India's GDP. 3. MSMEs account for about 35.4% of India's manufacturing output. 4. 'Creating Champion MSMEs' is one of the areas identified under the first Kartavya. Which of the statements given above is/are NOT correctly stated?

  1. MSMEs account for about 60% of India's exports.
  2. MSMEs contribute about 31.1% of India's GDP.
  3. MSMEs account for about 35.4% of India's manufacturing output.
  4. 'Creating Champion MSMEs' is one of the areas identified under the first Kartavya.
  • A. 1 only
  • B. 1 and 2
  • C. 3 only
  • D. 2 and 4

Q11. With reference to the venues associated with the Union Budget 2026-27, consider the following statements: 1. Budget 2026-27 was the first Budget prepared in Kartavya Bhawan, the successor to North Block. 2. The Halwa ceremony preceding the Budget was held at the Budget Press in North Block. 3. Kartavya Bhawan has permanently replaced Parliament House as the venue where the Union Budget is always presented. Which of the statements given above is/are correct?

  1. Budget 2026-27 was the first Budget prepared in Kartavya Bhawan, the successor to North Block.
  2. The Halwa ceremony preceding the Budget was held at the Budget Press in North Block.
  3. Kartavya Bhawan has permanently replaced Parliament House as the venue where the Union Budget is always presented.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 only
  • D. 1, 2 and 3