Consider the following statements regarding the "Annual Financial Statement" in India: 1. It is a statutory requirement under the Fiscal Responsibility and Budget Management Act, not the Constitution. 2. It includes estimates for the coming financial year. 3. It distinguishes between the revenue account and the capital account. Which of the statements given above is/are correct?

The correct option is 2 and 3 only. Explanation The "Annual Financial Statement," commonly referred to as the Union Budget, is a statement of the estimated receipts and expenditure of the Government of India for a specific financial year. It is the primary budgetary document presented to Parliament. Statement-wise Analysis: - Statement 1 is Incorrect. The Annual Financial Statement is a constitutional requirement mandated by Article 112 of the Constitution of India. It is not merely a statutory requirement under the Fiscal Responsibility and Budget Management (FRBM) Act, although the FRBM Act mandates additional documents (such as the Fiscal Policy Strategy Statement). - Statement 2 is Correct. The statement contains the estimates of receipts and expenditure for the ensuing financial year (April 1 to March 31). While it also presents actuals for the previous year and revised estimates for the current year for comparison, its primary purpose is to present estimates for the coming year. - Statement 3 is Correct. Article 112(2) of the Constitution explicitly requires that the estimates of expenditure embodied in the Annual Financial Statement shall distinguish expenditure on revenue account from other expenditure (capital account). This classification is fundamental to the structure of the Indian Budget. Key Takeaway: The Annual Financial Statement is constitutionally mandated under Article 112, and the Constitution itself requires the separation of the Revenue Account from the Capital Account.

Consider the following statements regarding the "Annual… - NCERT Class 12 Economics MCQ

NCERT Class 12 Economics — Chapter 7: Government Budget and the Economy

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Consider the following statements regarding the "Annual Financial Statement" in India:

It is a statutory requirement under the Fiscal Responsibility and Budget Management Act, not the Constitution.
It includes estimates for the coming financial year.
It distinguishes between the revenue account and the capital account.

Which of the statements given above is/are correct?

NCERT textbook question

From NCERT Introductory Macroeconomics · Page 1

Options

A2 only
B1, 2 and 3
C1 and 2 only
D2 and 3 only

Did you get this right?

Solution

The correct option is 2 and 3 only.

Explanation

The "Annual Financial Statement," commonly referred to as the Union Budget, is a statement of the estimated receipts and expenditure of the Government of India for a specific financial year. It is the primary budgetary document presented to Parliament.

Statement-wise Analysis:

Statement 1 is Incorrect. The Annual Financial Statement is a constitutional requirement mandated by Article 112 of the Constitution of India. It is not merely a statutory requirement under the Fiscal Responsibility and Budget Management (FRBM) Act, although the FRBM Act mandates additional documents (such as the Fiscal Policy Strategy Statement).
Statement 2 is Correct. The statement contains the estimates of receipts and expenditure for the ensuing financial year (April 1 to March 31). While it also presents actuals for the previous year and revised estimates for the current year for comparison, its primary purpose is to present estimates for the coming year.
Statement 3 is Correct. Article 112(2) of the Constitution explicitly requires that the estimates of expenditure embodied in the Annual Financial Statement shall distinguish expenditure on revenue account from other expenditure (capital account). This classification is fundamental to the structure of the Indian Budget.

Key Takeaway:
The Annual Financial Statement is constitutionally mandated under Article 112, and the Constitution itself requires the separation of the Revenue Account from the Capital Account.

Your note

More from Chapter 7: Government Budget and the Economy

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