Ans: D

Exp:

Statement 1 is incorrect: Tax elasticity is a measure of the degree of responsiveness of the change in tax collection due to the change in the tax rate. Laffer curve is the graphical representation of tax elasticity.

Statement 2 is incorrect: Tax buoyancy is an indicator to measure the efficiency and responsiveness of revenue mobilisation in response to growth in the gross domestic product(GDP) or national income.

  Hence, it refers to the responsiveness of changes in tax revenue growth to changes in GDP 

Ans: C

Exp:

Capital receipts include both debt-creating and non debt creating capital receipt:  

• Debt-creating capital receipts are ones that involve higher liabilities and future payment commitments of the Government. A majority of the government’s capital receipts are debt capital receipts. It includes- Loan taken by the central government from foreign government (external debt), Borrowing from market through sale of securities, Raising of money through National Small Saving funds, issuance of special securities to public-sector banks, securities, short-term bank debt, treasury bills, relief bonds, saving bonds, gold bonds,etc .

Ans: A

Exp:

A revenue deficit is a shortage of government funds to maintain daily affairs. It occurs when total revenue expenditure surpasses the  total revenue receipts. Thus, it means a difference between net income and expenditure. 

Implications of Revenue Deficit :

Statement 1 is correct: Higher revenue deficit forces the government to cut its expenditure on social welfare programmes, thereby impacting socio-economic development.

Statement 2 is correct: It can force the government to raise money through borrowings to fund the deficit.

Statement 3 is incorrect: The increase in liabilities and unproductive interest payments leads to lowering of  the credit ­ worthiness of the Government.

This revenue deficit is funded either through borrowings from the public or through disinvestment or by cutting revenue expenditures (mainly subsidies).

Ans: A

Exp:

India’s Five Year Plans were a series of economic development initiatives that the Indian government implemented to promote growth, industrialization, and social progress. The FYPs in India were framed, executed and monitored by the Planning Commission of India.

Statement 1 and 2 is correct: Second FYP (1956 – 61) was based on the Nehru-Mahalanobis Strategy.

The focus was on rapid industrialisation, self-reliance and investment in heavy capital goods industries, and there was a deliberate push toward the import substitution of basic and capital goods industries.

Statement 3 is incorrect: Fourth five-year plan was based on the Gadgil strategy with main focus on growth in agriculture. However, there was focus on heavy industrialisation in the second and third five-year plan.

Ans: B

Exp:

Statement 1 is incorrect: The Bombay Plan was a set of proposals for the economic development of India sponsored by the top eight industrialists of Bombay and not All India Trade Union Congress (AITUC)

Statement 2 is correct: Bombay Plan put emphasis on industrialisation in order to reduce the hardships of the population due to inflation and aimed at agricultural restructuring through the abolition of the Zamindari system, rapid industrialisation, development of essential and consumer goods and small, medium and cottage industries.

Statement 3 is correct: It proposed the importance of state intervention in the development of a nation, especially economically. It also recommended that the future government should defend indigenous companies against foreign competition in local markets based on the idea that young Indian industries would be unable to compete in a free-market economy.