Government Budgeting in Economic & Social Issues : Practice MCQ Questions & Answers with Explanations

3 practice sets · Page 1 of 1

The Union Budget 2025–26 introduced several new policy measures to stimulate economic growth. Consider the following statements:

Fiscal deficit for FY26 is projected at 4.5% of GDP, down from 5.1% in FY25.
The tax exemption limit under the new tax regime has been increased to ₹12 lakh annually.
The government introduced a special package for electric vehicles (EVs), including a 50% subsidy on EV manufacturing.

Which of the statements given above is/are correct?

1 and 2 only

2 and 3 only

1, 2 and 3

1 only

2 only

View Answer

Correct Answer: A — 1 and 2 only

Explanation:

The correct answer is A: 1 and 2 only.

Statement 1 is CORRECT: Fiscal deficit for FY26 is projected at 4.5% of GDP, reduced from 5.1% in FY25, reflecting fiscal consolidation.
Statement 2 is CORRECT: The tax exemption limit under the new tax regime has been raised to ₹12 lakh annually.
Statement 3 is INCORRECT: No 50% subsidy on EV manufacturing was announced. The government proposed EV incentives, but not at this level. GST on EVs remains at 5% to encourage adoption.

Additional Information:

₹5,000 crore allocated for green energy investments.
The budget emphasized fiscal prudence while promoting green and digital economy solutions.

The Union Budget 2025–26 introduced key proposals in the social sector. Which of the following measures were included?

A new National Health Insurance Scheme was introduced with an allocation of ₹1 lakh crore to provide coverage to rural families.
A National Education Mission with ₹80,000 crore has been launched to reform school and higher education infrastructure.
The government has announced 100 new IITs and IIMs across the country to promote advanced learning and research.

1 and 2 only

1 and 3 only

2 and 3 only

1, 2 and 3

1 only

View Answer

Correct Answer: E — 1 only

Explanation:

The correct answer is E: 1 only.

Statement 1 is CORRECT: A new National Health Insurance Scheme with ₹1 lakh crore was announced targeting rural families. Total health expenditure in the budget is set at ₹3 lakh crore.
Statement 2 is INCORRECT: A National Education Mission was announced, but the allocation was ₹50,000 crore (not ₹80,000 crore).
Statement 3 is INCORRECT: No new IITs or IIMs were announced in the budget. The focus was on expanding existing research centers. A new digital learning scheme was announced to enhance online education.

With reference to the Union Budget 2025–26, consider the following statements:

The Minimum Support Price (MSP) for all major crops was increased by 12% to ensure better farmer incomes.
A new Infrastructure Development Fund of ₹2.5 lakh crore has been created for the construction of rural roads and port connectivity.
The public sector banks (PSBs) have been allotted ₹25,000 crore to improve their capital adequacy ratios.

Which of the statements given above is/are correct?

1 and 2 only

1 and 3 only

2 and 3 only

1, 2 and 3

1 only

View Answer

Correct Answer: E — 1 only

Explanation:

The correct answer is E: 1 only.

Statement 1 is CORRECT: MSP for major crops was increased by 12% to boost farmer incomes.
Statement 2 is INCORRECT: A new Infrastructure Fund was announced, but the amount was ₹2 lakh crore (not ₹2.5 lakh crore) and it was not exclusively for rural roads and port connectivity.
Statement 3 is INCORRECT: ₹25,000 crore was allocated to PSBs to enhance their lending capacity, not specifically to improve capital adequacy ratios.

Additional Information:

A ₹1.4 lakh crore allocation for Pradhan Mantri Awas Yojana was announced for affordable housing.
The Infrastructure Fund will cover both urban and rural areas in a phased manner.