PILLAR #2: BUDGET, TAXATION, Subsidies, Disinvestment, Deficit, Public Finance

Table of Contents
20 💼🍋 Pillar #2: Budget: Relevance in UPSC?................................................................................ .123
20.1 ( 🤴🗳🧔)=🥛💼 Interim Budget (अंतरिम बजट)..........................................................................................124
20.1.1 👜🥻Budget’s THEME ( बजट की विषयवस्तु).................................................................................................................... . 124

20.2 📘📘 Economic Survey (आर्थिक सर्वेक्षण).......................................................................................................125

20.3 🕵🏻Finance ministry and its departments: (वित्त मं त्रालय और उसके विभाग)..........................................................125
20.1.2 🕵🏻 IAAD-OIOS by CAG ( विभिन्न मंत्रालयों की लेखा परीक्षण के लिए डिजिटल पोर्टल)........................................................................... .126

20.4 💼Budget→ ⏳Revenue Part→ 📥Receipts→ 🍋Tax Receipts......................................................... .126

20.1.3 Types of Direct Taxes: proportional / degressive..................................................................................................126

21 🍋🤷‍♀️ Direct Taxes: Types ( प्रत्यक्ष करों के प्रकार)...................................................................................... .126

20.1.4 🧅 Indexation benefit / cost inflation index (CII) benefit.................................................................................... .127

21.1 🍋🤷‍♀️: 👪 Income Tax on Individuals (व्यक्तिक आयकर).............................................................................. .128

20.1.5 🍋🤑 Tax Refund → Deferred Tax Assets............................................................................................................. 129
22 💼BUDGET→ ⏳REVENUE PART→ 📥RECEIPTS→ 🍋TAX →🛒 Indirect Taxes...............129
20.1.6 GST related Updates................................................................................................................................................. 129
20.1.7 GST Rates................................................................................................................................................................... 130
20.1.8 🍋🛒
GST on Actionable Claims............................................................................................................................ . 130
20.1.9 → GST on Actionable Claims → Rent................................................................................................................. . 131
🎲
20.1.10 GST on Actionable Claims → Lottery / Online Gaming............................................................................ .131

22.1 →GST → Lottery / Online Gaming → GST on full bet value (gross value)?.................................... .132
20.1.11 🎲GST → Lottery / Online Gaming → on ‘entry bets’ but not on ‘winnings’.............................................. .132
20.1.12 🥂GST on Extra Neutral Alcohol (ENA)?.......................................................................................................... . 132
20.1.13 🌾GST on Millets? (2023)...................................................................................................................................... 133
22.2 📈 Tax Collection Figures: जीएसटी राजस्व प्राप्ति के आंकड़े....................................................................................133
20.1.14 📈GST Collection.................................................................................................................................................. . 133
22.3 📈All Tax Collection: Highest to Lowest...............................................................................................134
23 🍋 (🧔⚖️👨‍🦲👳🏻‍♀️👳🏻) Taxation → Finance Commission.................................................................. .135
23.1 Introduction to Finance Commission (वित्त आयोग).................................................................................. .135
23.2 🕵️‍♂️(🍋 🧔⚖️👨‍🦲) 15th vs 16th FC - Membership................................................................................... .135
20.1.15 🕵🏻 15th vs 16th FC - timelines ............................................................................................................................ . 135
20.1.16 🕵🏻 FC not setup ‘every five years’ in reality........................................................................................................ .136
20.1.17 🕵🏻 15th vs 16th FC - Terms of Reference (TOR: )?............................................................................ .136
विचारार्थ विषय

23.3 🍋 [👨‍🦲⚖️👳🏻‍♀️⚖️👳🏻] Horizontal Tax Devolution among States..............................................................137

23.4 (🍋👺)🕵🏻Black Money → Notable Organisations...............................................................................138
23.5 🫵 Burden of Proof & PMLA................................................................................................................ .139
20.1.18 🍫 PMLA Amendments via Finance Bill = Money Bill?................................................................................... .139
20.1.19 🕊️ Interim-Budget-2024 : Amnesty for Small Tax Payers / Case withdrawal.................................................140
20.1.20 🔖 ITR / income tax return form – highest ever................................................................................................ .140
20.1.21 🔍 Income Tax : E-Governance Initiatives in Modi-Raj....................................................................................141
23.6 📥🚆📮 Budget → Revenue Part...........................................................................................................141
23.7 ( →) Revenue Expenditure → Subsidies................................................................................ .142
24 📥🗓 Budget → Capital Part........................................................................................................ .142

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 20.1.22 → Budget → Capital Part → Effective Capital Expenditure........................................................................143
20.1.23 🗓📤Capital expenditure for a Company.......................................................................................................... . 143

25 💼🤲🏻 Types of deficits: घाटे के प्रकार..................................................................................................... .143

20.1.24 💼🤲🏻 Types of Budget- Surplus, Deficit, Balanced............................................................................................ .143
20.1.25 🐘 Yudhishthir Disclaimer on Deficit Formulas............................................................................................... .144
20.1.26 💼🤲🏻 Budget Deficit (बजट घाटा)............................................................................................................................... . 144
20.1.27 💼🤲🏻 Fiscal Deficit - formula Tamilnadu Textbook...........................................................................................144
20.1.28 💼🤲🏻 Fiscal Deficit - formula NCERT Textbook (two formulas).................................................................... .145
20.1.29 💼🤲🏻 Gross Fiscal Deficit (GFD) vs NET fiscal Deficit..................................................................................... .146
20.1.30 💼🤲🏻 Primary Deficit (प्राथमिक घाटा).......................................................................................................................... . 146
20.1.31 💼🤲🏻 Gross Primary Deficit (GPD: सकल प्राथमिक घाटा)...............................................................................................147

25.1 Deficit Graph / datasets..........................................................................................................................147

25.2 🔀💸Automatic Stabilizers (स्वचालित-स्थिरीकारी)...........................................................................................148
20.1.32 🍋 Tax multiplier is a negative multiplier............................................................................................................ 149
20.1.33 🍋 Disposable income & marginal propensity to consume (MPC)..................................................................149
20.1.34 🍔 Autonomous expenditure multiplier (AEM) & Government expenditure multiplier............................ .149
20.1.35 ⚖️ Balanced budget multiplier = 1 how?............................................................................................................ . 149
20.1.36 💼🤲🏻 THREE Functions of Govt Budget............................................................................................................ . 150
20.1.37 💼🤲🏻 Effects of Budget/Fiscal policy on Demand & Savings.............................................................................151
25.3 👜 Gender Budget (लैंगिक बजट)...................................................................................................................151
25.4 📯🧔Types of schemes (योजनाओं के प्रकार).....................................................................................................152
20.1.38 📯🧔Ministry-wise Highest Allocation (amt in ₹ lakh crore) in 👛Interim-Budget-2024:...........................152
20.2 Win## Series- what is covered in the past?............................................................................................152
20.2.1 Win20: already covered Following in Pillar#2..................................................................................................... .153
20.2.2 Win21: already covered Following in Pillar#212................................................................................................. .154
20.2.3 Win22: already covered Following in Pillar#2..................................................................................................... .156
20.2.4 Win23 covered following topics in Pillar2............................................................................................................. 158

20.3 🔠 Mock Tests ka Maha-Parv.................................................................................................................160

20.4 👨‍🏫📡MRUNAL’S ECONOMY COURSE FOR UPSC............................................................................160

👨‍🏫📡MRUNAL’S ECONOMY COURSE FOR UPSC

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20 💼🍋 P ILLAR #2: BUDGET: RELEVANCE IN UPSC?

Year 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
MCQ 3 3 4 1 1 2 3 1

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20.1 ( 🤴🗳🧔)=🥛💼 I NTERIM BUDGET (अंतरिम बजट)

 Our constitution does not define or require interim budget. (अंतरिम बजट का सं विधान में जिक्र नहीं है)
 But, during election year or extreme situation (E.g. when coalition government may collapse
before its term) then it’s considered unethical for such Govt. to make drastic/populist changes in
budget like “2gm gold for the marriage of every BPL-girl.”
 So, while they’ll present a budget in the regular fashion i.e. 3 documents (AFS, FinBill,
Appro.Bill) & 6 Stages of Passing. But it (should) not have grand populist announcements. (ऐसी
परिस्थितिमे लोक-लुभावन की योजनाओ के साथ बजट प्रस्तुत करना नैतिक नहीं होगा, वरना विपक्षी नेता जीत नहीं पाएं गे चुनाव)
 Such budgets are called Interim Budgets, and were presented in 2004 (Yashwant S.), 2009
(Pranab M.), 2014 (Chidambaram P.) and 2019 (Piyush G.)
 Just like a Regular General Budget, an Interim budget is valid for the whole financial year,
however in between if new government is formed, they may present another budget to change
the provisions. (वैसे तो पूरे वर्ष के लिए वैध होता है)
 E.g. 2014-Feb: FM Chidambaram presented (interim) budget in 15th Lok Sabha, but then
UPA/Congress defeated in general election→ 2014-July: BJP’s FM Arun Jaitley presented (Full)
General Budget in 16th Lok Sabha.
 2019-Feb: FM Piyush G. presented Interim budget in 16th Lok Sabha → 2019-May: Modi won
General Election → 2019-July: FM Nirmala S. presented (Full) Gen Budget in 17th Lok Sabha.
 2024- Similar scene.

✋Note: throughout the handout, I’ve used the term “Full” budget to
differentiate it from “Interim” Budget for easier revision & visualization. But in
Mains, you should use the word ‘General Budget’(सामान्य बजट)
20.1.1 👜🥻 Budget’s THEME (बजट की विषयवस्तु)
Constitution doesn’t require, but sometimes FM will do it to create media-hype:
Budget Year Did FM Speech mention a specific theme (विषयवस्तु)?
2023 (Full) ‘Saptarishi’ (7 priority) for Amrit Kaal, namely:
Paperless 1) Inclusive Development , 2) Reaching the Last Mile, 3) Infrastructure and

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 Investment, 4) Unleashing the Potential, 5) Green Growth, 6) Youth Power , 7)
Financial Sector
• Due to general election, Interim budget was presented in 2024-Feb. No
2024-Feb
changes in the taxes made. Very few new schemes announced.
Interim
• Separately, Finance Minister also presented a 'White Paper' comparing the
Paperless
UPA/Congress Govt vs 10 years of Modi govt. (श्वेतपत्र)
20.2 📘📘 E CONOMIC SURVEY (आर्थिक सर्वेक्षण)
- A document prepared by (usually) by the Chief Economic Adviser (CEA) in FinMin.
- ✋No constitutional obligation to prepare or present it but usually it’s tabled in the parliament a
day before the Union Budget. (सं विधानिक रूप से ऐसा करना अनिवार्य नहीं)

 Released both in digital and paper (hardcopy) on 31/Jan/2023, by CEA.

2022-23  No theme explicitly mentioned in preface. but focus areas were

1 Volume  India’s Post-Corona economic recovery is complete
(Published  GDP growth likely to be 6% to 6.8% for 2023-24
on
 2022’s survey: the social sector was covered in chapter number-10.
31/Jan/23)
 2023’s survey: social sector chapter was shifted to chapter number 6- to highlight
that Modi Govt is very serious about social sector (health, edu etc.)
 No economic survey was presented before the interim budget-2024
2024  However, CEA presented a small report titled ‘Indian Economy – A Review’.
Mostly talking about Modi Govt’s achievements.

20.3 🕵🏻F INANCE MINISTRY AND ITS DEPARTMENTS: (वित्त मंत्रालय और उसके विभाग)

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20.1.2 🕵🏻IAAD-OIOS by CAG (विभिन्न मं त्रालयों की लेखा परीक्षण के लिए डिजिटल पोर्टल)
- One Indian Audit & Accounts Department (IAAD) One System (OIOS)
- Made by CAG- for paperless administration.

20.4 💼B UDGET→ ⏳R EVENUE PART→ 📥R ECEIPTS→ 🍋T AX RECEIPTS

बजट→ राजस्व भाग→ प्राप्तियां→ कर प्राप्तियां

20.1.3 Types of Direct Taxes: proportional / degressive

Direct Tax Example

Progressive learned in previous section.
Proportional If Govt. had a single 10% flat rate direct tax on income irrespective of whether
समानुपाती🔂 you’re a poor, middle class, upper middle class or a rich person. Then each
taxpayers’ same proportion of income(10%) will go into taxes.
Degressive tax: • It is a blend of progressive tax and proportional tax. If a direct tax
increases upto a point & after that limit, a uniform rate is charged (5-5-10-
10-...10). So, its partly proportional because tax rate remains unchanged
✋
even if income increases. ( but further PHD not req on this term.)
• If MCQ asks then Ans= income tax is PROGRESSIVE TAX.

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21 🍋🤷‍♀️D IRECT TAXES: TYPES (प्रत्यक्ष करों के प्रकार)
Direct Taxes 🧔 of Union Govt. * Means Abolished 👩‍🦲🕉 Of State Govt.
👜On income - Corporation Tax, Minimum Alternate 1. Agriculture Income tax
(आय पर) Tax (MAT) 2. Professional Tax
- Income Tax on income except agri. (Constitutional ceiling of
- Capital Gains Tax (CGT) max ₹2500 per year)
- ❌ *Dividend Distribution Tax (DDT)
🏠On assets, - Securities Transaction Tax (STT) 1. Land Revenue (भू राजस्व )
transactions & Commodities Transaction Tax (CTT) 2. Stamp/Registration duty
(सं पत्ति, लेनदेन पर) - ❌ *Wealth Tax (सं पत्ति कर) 3. Property tax in urban areas

- ❌ *Banking Cash Transaction Tax

(शहरी क्षेत्रों में सं पत्ति कर)

- ❌ *Estate Duty
🛒On  ❌ *Hotel Receipt Tax, *Gift Tax #Road Tax (although debatable

 ❌ *Fringe Benefit Tax i.e. When the

expenditure (खर्च as in some States/categories of
पर) vehicles- the seller will collect &
employer give benefits to employee apart
submit)
from salary e.g. subscription to gymkhana
or golf-club.
🚩👶🏻FAQ: How much money collected from these taxes? Ans. REF: Pillar2A2: GST Handout
Note: Interim-Budget-2024 has made no significant /noteworthy changes in above taxes.

20.1.4 🧅Indexation benefit / cost inflation index (CII) benefit

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- Indexation benefit = adjusting the profit as per changes inflation. So that person has to pay less
amount of Long term Capital Gains tax. (This is not available in short-term capital gains tax)
Indexation benefits on capital gain tax? BEFORE AFTER 1/APRIL/2023
profits made from Debt mutual funds (they
invest the clients money in Company bonds/ G- Yes given Stopped
sec/debt instruments.)
Normal shares / bonds NO NO
Sovereign gold bonds (Ref#1C) Yes Yes
real estate (building/property) Yes Yes
Bitcoin/cryptocurrency profit NO NO
🙋🏼‍♀️FAQ: is Indexation benefit given in XYZ other instrument? Ans. I don’t know. We are not here
for Chartered Accountant exam.
21.1 🍋🤷‍♀️: 👪 I NCOME TAX ON INDIVIDUALS (व्यक्तिक आयकर)

You can use any ONE of the given system OTR or NTR.
Sr Matter OTR NTR-2023
Sr.1 (Non-Agriculture) Gross Income of salaried employee aged 7,50,000 7,50,000
less than 60YR
Sr.2 minus Standard deduction -50000 -50000
Sr.3 minus NPS deduction -50000# N/A*
Sr.4 minus LIC, ELSS (Ref#1C), Home Loan etc deduction -150000# N/A*
Sr.5 Taxable Income: (Sr.1-2-3-4) 500000 700000
Sr.6 Income Tax on taxable income (Sr.5) 12500 25000

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 Sr.7 REBATE on Income Tax (Sr.6) -12500** -25000**
Sr.8 Income tax to be paid (Sr.6-7) 0 0
Sr.9 surcharge on IT if taxable income >Rs.50 lakh 0 0
Sr.1 4% health & Education Cess on (Sr8+9) (0+0)x4%=0 (0+0)x4%=0
0
Total Tax to be paid 0 0
 # These are max deduction limits. So if u invest more money in LIC/NPS beyond these limits,
still you’ll NOT get more deduction than this. (इससे ज्यादा पैसा डालोगे तो भी ज्यादा माफ़ी नहीं मिलेगी)
 *in NTR-2023, whether person saves money in LIC/NPS etc or not, he’ll not get any deduction
benefit (except 50k Std deduction). So N/A = not applicable.
 **Tax rebate allowed only if taxable income upto Rs.5 lakh in OTR OR Rs.7 lakh in NTR. So if
Akshay Kumar having 200 crore income = he’ll not GET REBATE. See next table.
 Interim budget-2024: No changes in above system/slabs.

20.1.5 🍋🤑 Tax Refund → Deferred Tax Assets

• In Pillar#1B2:NPA, we had learnt how bankers delete/write-off the NPA from their balance
sheet for tax benefit.
• Deferred tax assets is a concept associated with its tax-benefit / tax refund.
• How exactly works? Not imp. If you have time to waste then watch my 9 min Youtube
lecture on it https://youtu.be/DzNBzhYw6EY?si=riANs_psHdfP45uz

22 💼BUDGET→ ⏳REVENUE PART→ 📥RECEIPTS→ 🍋TAX →🛒 I NDIRECT TAXES

- Interim Budget 2024 = no significant change in indirect taxes.

20.1.6 GST related Updates

• GST is a destination based indirect tax on consumption of goods and services. (जीएसटी वस्तुओं
और सेवाओं के खपत-स्थान पर आधारित अप्रत्यक्ष कर है।)
• It was added in the constitution using 101st amendment act 2016
• From 1st July, 2017: Goods and Services Tax (GST: वस्तु एवं सेवा कर) became effective.

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20.1.7 GST Rates

20.1.8 🍋🛒GST on Actionable Claims

 An actionable claim represents a legal right to demand/recover something (money, goods,
services) from another party- subject to terms and conditions.
 e.g. loan given by bank, credit card, Insurance policy, unpaid invoices, rent, etc.

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 Actionable claims are subjected to GST. But SOME OF THEM may have separate calculation
methods.
Matter Amount GST
(A) Loan given / credit card spending
₹10 lakh N/A
limit given
(B) Application processing fee of Bank
₹500 18% GST
loan/credit card
(C) Late fees / penalty fee
₹100 18% GST
(if/when applicable)
GST only on the application fees (₹500)
Total A+B= ₹10,00,600
and penalty ( ₹100)
🚩👶🏻 FAQ: How is GST counted on rent and unpaid invoices etc? Ans. We are not here for C.A.
exam. 🐎Be a race-horse. Only focus on the track. 🐂Don’t loiter like a street-bull.

20.1.9 🎲 GST on Actionable Claims → Rent

🎲
20.1.10 GST on Actionable Claims → Lottery / Online Gaming
Casino and online gaming apps owner had started court-litigation regarding the definition itself - to
avoid paying taxes. Their argument is as follows:
🧛‍♂️Casino/Gaming Owners’ demand 👩🏻‍⚖️GST council decision
🙏Lottery/online gaming is not actionable claim. Because ✋It is an actionable claim and we
there is no guarantee of winning. So don’t ask for GST. will demand GST.
🙏ok then plz have 18% GST on game of skill (e.g. Chess) ✋28% GST on everything. We
and 28% GST on 🎲 game of luck (e.g.Roulette, Dice) don’t care if it is a game of skill or
game of luck.
🙏still if u want to charge GST on it → then GST should be ✋We’ll charge 28% GST on entire
only on the fees. Plz don’t ask GST on the entire amount amount. See next section 👇
(=full bet value).

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22.1 🎲GST → L OTTERY / ONLINE GAMING → GST ON FULL BET VALUE (GROSS
VALUE)?

Components Amt 🧛‍♂️Companies’ demand 👩🏻‍⚖️GST council

Bet ₹ 80 🙏Plz don’t ask GST on this rejected

Platform Fees ₹ 20 🙏Plz ask only 18% Gst on this rejected

Total (Full Value of Bet)

₹ 100
🙏Plz don’t ask GST on this full 28% GST on ₹100
/ gross revenue bet value!

20.1.11 🎲GST → Lottery / Online Gaming → on ‘entry bets’ but not on ‘winnings’

20.1.12 🥂GST on Extra Neutral Alcohol (ENA)?

 ENA is made from foodgrains and sugarcane molasses (molasses is a byproduct left after
crushing of sugarcane.)

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 ENA has neutral smell and taste. (कोई स्वाद/सुगंध नहीं)
 ENA is colourless liquid, it has no impurities. (रंगहीन. कोई अशुद्धि नहीं)
 ENA is used as raw material in cosmetics, medicines, ink, and liquor.

Earlier there was confusion about taxes on ENA. But 2023-Oct: GST Council has given above
clarification. That’s why news-headlines saying “GST Council cedes right to states on taxing ENA used
in liquor for human consumption” (जीएसटी परिषद ने मानव उपभोग के लिए बनाई जाने वाली दारु/मदिरा में इस्तेमाल होने
वाले ईएनए पर कर लगाने का अधिकार राज्यों को सौंप दिया)

20.1.13 🌾GST on Millets? (2023)

 Millets = foodgrains such as Jowar (sorghum), Bajra (pearl millet), ragi (finger millet),Kodra
(Kodo millet)
 2023 celebrated as International year of millets by Food and Agriculture Organization (FAO)
and United Nations (UN). So, GST council gave following clarification
Millet flour / its products (e.g. biscuits) pe GST BEFORE AFTER
Pre-packed & branded e.g. Britannia Ragi biscuit, Patanjali-Atta 18% 5%
Loose /unbranded (छु ट्टा/खुल्ला बेचा जाए. बिना ब्रांडेड थैली में पैक किए) 0% 0%

22.2 📈T AX COLLECTION FIGURES: जीएसटी राजस्व प्राप्ति के आंकड़े

20.1.14 📈GST Collection

Note: in above Chart: FY18 = 2017-18, FY24= 2023-24 etc.

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22.3 📈A LL TAX COLLECTION: HIGHEST TO LOWEST

Note: Service Tax (Legacy) = service tax is discontinued. But old court-cases se recovery.
👜🥻 Int.Budget-2024 👨🏻 🛒 🏢 ⛽️ ⚓️
IT > GST > Corporation> Excise> Customs > Service Tax
👜🥻Budget-2023 🛒GST> 🏢 Corporation>👨🏻IT >⛽️Excise> ⚓️ Customs
👛Budget-2022 Same as above (2023)
Budgets from 2019, Sometimes Corporation tax was #2, sometimes income tax was #2 but
2020, 2021 poor cost benefit memorizing all that so I am deleting.
Budgets Before 2019 🏢 Corporation> 🛒GST>👨🏻IT >⛽️Excise> ⚓️ Customs

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23 🍋 (🧔⚖️️👨‍🦲👳🏻‍♀️👳🏻) T AXATION → FINANCE COMMISSION
23.1 INTRODUCTION TO FINANCE COMMISSION (वित्त आयोग)
1. Fiscal Federalism refers to the division of responsibilities of i) taxation and ii) expenditure
between the different levels of the government. (राजकोषीय सं घवाद: कें द्र और राज्यों के बीच कराधान और खर्च की
जिम्मेदारियों का आवंटन/बटवारा/विभाजन)
2. While the 7th schedule assigns many responsibilities to the States but their taxation power is
relatively lower than Union’s. So, Finance Commission plays a key role in transferring union’s
revenue resources to the state.. (राज्य की कराधान शक्तियां कम है इसलिए वित्त आयोग कें द्र के करो से हिस्सा दिलाता है)
3. Article 280: President of India forms a Finance Commission (a quasi-judicial body) every 5th
Year or earlier, with 1 chairman and 4 members. Eligible for re-appointment. Recommendations
are not binding on the government but usually not rejected.
📔Further self-study & HINDI TERMS@ M.Laxmikanth’s Indian Polity ch.45. or Unacademy Notes.
23.2 🕵️‍♂️(🍋 🧔⚖️️👨‍🦲) 15 TH VS 16TH FC - MEMBERSHIP
Matter 15th FC 16th FC
Economist Dr.Arvind Panagariya, former Vice-
Chairman IAS N. K. Singh
Chairman, NITI Aayog
Full Time
Dr.Anoop Singh, Economist Mr. Ajay Narayan Jha, ex-member, 15th FC
Member
Full Time Mrs. Annie George Mathew from Indian Audit and
Ajay Narayan Jha (Ex-IAS)
Member Accounts Service (IA & AS)
Dr. Niranjan Rajadhyaksha (org: Artha Global).
Full Time Dr. Ashok Lahiri (Bandhan
Update 2024-Feb: He resigned from 16th FC job.
Member Bank)
Govt looking for his replacement.
Part Time Prof.Dr. Ramesh Chand Dr. Soumya Kanti Ghosh, Group Chief Economic
Member (Agri-Economist) Advisor, State Bank of India
Member
IAS Arvind Mehta IAS Ritvik Pandey
secretary

20.1.15 🕵🏻 15th vs 16th FC - timelines

Matter 15th FC 16th FC
Formed in 2017-Nov 2023-Nov
6 years
• (1) Interim Report: 2020–21
5 years starting from
• (2) Final Report: 2021–22 to 2025–26:
Report covering 1/April/2026
ending on 31/Mar/2026.
(2026-31)
Two reports bcoz JK removed from full-state
list / Art370. so they needed more time to study.
Deadline to submit
Not imp. 31/Oct/2025.
report

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 🕵🏻
20.1.16 FC not setup ‘every five years’ in reality
• Finance Commission normally takes about two years to study the situation and make their
recommendations.
• Article 280(1): FC is to be constituted every fifth year or earlier.
• But in reality sometimes it is not done every five years: e.g.
FC Formed in Comment Report Covered
10th FC 1992 1995–00 (5 yrs)
11th FC 1998 gap of 6 years between 10FC-11FC. 2000–05 (5 yrs)
15th FC 2017 6 yrs via two reports.
16th FC 2023 gap of 6 years between 15FC-16FC. 2026–31 (5 yrs)

🕵🏻
20.1.17 15th vs 16th FC - Terms of Reference (TOR: विचारार्थ विषय)?
President of India has ordered them to study and recommend following:
15th FC 16th FC
- Union Taxes’ vertical devolution to the states, and its horizontal distribution
among the states. (except cess, surcharge and IGST).
- Union’s grant-in-aids to the states. (कें द्र द्वारा राज्यों को अनुदान)
Same as 15th FC
- How to augment State Govts’ Consolidated funds to help their Panchayats
and Municipalities
- Give suggestion for disaster management funds

Reward the States for controlling population, improving tax collection etc. 🤐 N/A. Silent
✅ Ans. Yes done. Observe the horizontal devolution formula parameters. on it.
propose performance based incentives/grants for States. 🤐 N/A. Silent
✅
Ans. Yes it is done. on it.
should we give less money to States, bcoz Union ke Kharche (expenses) bahut hai
for defence, internal security, infrastructure, railways, climate change, and Union
also has to run UTs without legislature?
🤐
Silent / Not

✅ Ans. Yes that’s why reduced from 42% (14th FC) to 41% (15 FC) saying union
mentioned.

has to run UT of JK & Ladakh.

Keep in mind the national development programme including New India – 2022
(e.g. Modi’s Swatchch Bharat Mission, Digital India Mission etc.).
✅ Ans. Yes, that’s why gave some conditional/ tied up grants for 🤐Silent / Not
😰
water/sanitation. Non-BJP states didn’t like this, bcoz they feel FC grants is mentioned.
their constitutional right, and not alm (यह पैसा हमारा सं वैधानिक अधिकार है. कोई खैरात नहीं है
जो आप चुनावी विचारधारा के हिसाब से जोड़ रहे हो- ऐसा विपक्ष राज्य सरकारों का कहना था).
Use Census-2011 data while making formulas. (जनगणना) . This was criticized by
Southern States bcoz they feared they’d get less ₹ compared to Northern States
🤐 Silent / Not
mentioned.
because Southern states controlled their population.
Recommend measures for Fiscal Discipline/Consolidation for the Union and 🤐 Silent / Not
State governments. (राजकोषीय अनुशासन/समेकन) mentioned.

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e.g. asking State governments to stop populist schemes like Free TV/Mixer
Grinder/Free electricity to voters. (लोकलुभावन योजनाएं )
✅ Ans. While 15th FC Chairman NK Singh as spoken against the Revdi-culture,
but no hardcore % or formula type recommendation given.
suggest ways for allocation of non-lapsable funds for defence and internal 🤐 Silent / Not
security. (रक्षा और आंतरिक सुरक्षा बिनव्यपगत निधि) mentioned.

Award for the UT of J&K. (This terms of reference required under Jammu and 🤐 Silent / Not
Kashmir Reorganisation Act, 2019. जम्मू कश्मीर पुनर्गठन अधिनियम) mentioned.

23.3 🍋 [👨‍🦲⚖️️👳🏻‍♀️⚖ ️👳🏻] H ORIZONTAL TAX DEVOLUTION AMONG STATES

🔠 MCQ. For the horizontal tax devolution, the Fifteenth Finance Commission used how many of
the above as criteria other than population area and income distance? (Prelims-2023)
1. Demographic performance 2. Forest and ecology 3. Governance reforms
4. Stable government 5. Tax and fiscal efforts
Codes: (a) Only two (b) Only three (c) Only four (d) All five

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23.4 (🍋👺)🕵🏻B LACK MONEY → NOTABLE ORGANISATIONS

FinMin → Department of Revenue → ED is a Specialized financial

Enforcement investigation agency to enforce following laws
Directorate (ED: प्रवर्तन • Foreign Exchange Management Act,1999 (FEMA)
निदेशालय ) founded in ’56, • Prevention of Money Laundering Act, 2002 (PMLA)
HQ: Delhi. • Conservation of Foreign Exchange and Prevention of Smuggling
Activities Act, 1974 (COFE- POSA) to fight against smugglers.
FinMin → Department of Revenue → CBIC → DRI is an agency to
Directorate of Revenue
investigate Customs/Narcotics/Wildlife/Arms related smuggling & illegal
Intelligence
activities. (DRI: राजस्व आसूचना निदेशालय)
Dept of Revenue → CBIC → CBN (HQ: Gwalior). Also called National
Central Bureau of Opium Agency. (1) It supervises opium/poppy cultivation in Madhya
Narcotics (CBN) Pradesh, Uttar Pradesh and Rajasthan. (2) It fights against drug trafficking
using powers of Narcotic Drugs and Psychotropic Substances Act, 1985
An agency in the Ministry of Finance.
Central Economic
It receives information from Law Enforcement Agencies (e.g. CBI, ED,
Intelligence Bureau
SFIO, State Police etc) and acts as the Central Repository of economic
(CEIB)
offense database.
• Chairman= Finance Minister
Economic Intelligence
• Member-secretary= Director General of CEIB
Council (EIC)
• Representatives from CBDT, CBIC, ED, SEBI, RBI, R&AW etc.
Financial Intelligence It analyses the suspected financial transactions in domestic and
unit (FIU-2004: वित्तीय crossborder levels & reports directly to the Economic Intelligence Council
आसूचना एकक) (EIC: आर्थिक आसूचना परिषद) headed by the FM.
Deals with appeals in Union’s indirect taxes other than GST. (For GST,
Customs, Excise and there is separate tribunal, refer to previous handout)
Service Tax Appellate - Stage1: Junior Officers | Stage2: Commissioner
Tribunal (CESTAT) - Stage3: Customs, Excise and Service Tax Appellate Tribunal
(CESTAT) | Stage4: HC → SC.
Financial Action Task - is a brainchild of G7, Combating Money laundering and terror
Force (FATF-1989: finance. India became member in 2010. HQ@Paris
HQ@Paris
- Greylist: nations that safe haven for terror financing and money
वित्तीय कार्रवाई कार्यदल: ऐसे
laundering. E.g. Syria, Yemen, etc are on the grey list. (Update 2022:
बदमाश ग़ैर ज़िम्मेदार देशों की
Mauratius & Pakistan REMOVED from this list)
सूची बनाता है जहाँ धनशोधन
और आतंकी वित्तपोषण के - Blacklist: nations that are not cooperating in the global fight against
ख़िलाफ़ सख़्ती नहीं है) money laundering, terrorist financing. Iran and N.Korea

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 OECD (1961:  Organisation for Economic Co-operation and Development
HQ@Paris.  Works for International cooperation in the matters of economy and
आर्थिक सहयोग तथा विकास taxation. Known for Base erosion and profit shifting (BEPS) Norms.
सं गठन)
 India is not a member of OECD, yet. HQ@Paris.

23.5 🫵B URDEN OF PROOF & PMLA

Burden of proof = responsibility of substantiating statements with evidence. (सुबूत पेश करके आरोप को
साबित/सिद्ध करना।)
Burden of Proof (सबूत का बोझ) Reverse Burden of Proof (सबूत का उल्टा-बोझ)
On Police/Prosecution. They’ve to prove accused On Accused Person. He has to prove he
person committed crime. (पुलिस/सरकारी वक़ील ने साबित didn’t commit crime. (आरोपी पर बोझ होगा कि वह
करना होगा कि आरोपी ने वो जुर्म/अपराध/गुनाह किया है) स्वयं साबित करे उसने गुनाह नहीं किया।)
e.g. Present Indian penal code (IPC) / future  e.g. Terrorist and Disruptive Activities
Bharatiya Nay Sanhita (Prevention) Act (Sanjay Dutt case)
 Narcotic Drugs and Psychotropic
Substances Act, 1985 (SRK-son
Aryan)
 Prevention Of Money Laundering Act,
2002 (Rahul - National Herald Case)

20.1.18 🍫 PMLA Amendments via Finance Bill = Money Bill?

• 1998: UN General Assembly (UNGA) declaration on Money Laundering → 2002: India
enacts this law to combat money laundering with search-seizure-arrest-penalty. Main
agency? Enforcement Directorate. (सं युक्त राष्ट्र सामान्य परिषद की घोषणा के बाद भारत ने क़ानून बनाया था)
• Cases heard @ PMLA Adjudicating Authority (न्यायनिर्णयन प्राधिकारी) → PMLA Appellate
Tribunal (अपीलीय प्राधिकरण) → High Court → Supreme Court.
• Between 2015-19: Govt amended the PMLA Act
• To increase the powers ED to summons, arrest, and raids. (प्रवर्तन निदेशालय की शक्तिओं में बढ़ोतरी)
• Imposed ‘reverse’ burden of proof on accused. So automatically it became near impossible to
get bail. (ज़मानत लगभग असं भव क्योंकि सबूत का उल्टा-बोझ आरोपी पर ही डाला गया)
• These changes were made by amending PMLA via Finance bill (instead of directly amending
the PMLA Act- to avoid Rajya Sabha scrutiny) (धनशोधन क़ानून में सीधा सं शोधन नहीं किया वर्ना राज्य सभा
की अनुमति लेनी पड़ती है, और राज्यसभा में उस वक्त बीजेपी की बहुमति नहीं थी। इसलिए परोक्ष रूप से वित् बिल में छिपाकर
किया।)
• So, case filed in Supreme court against this for violation of fundamental rights of the accused
person (through reverse burden of proof).
• 2022: SC held Govt is right in doing this & Opposition parties/PIL-Walla are wrong.
• 2023: Chief Justice of India (CJI) D.Y. Chandrachud said he will constitute a seven-judge
Constitution Bench to revisit this matter. (इस मामले को फिर से देखेगी सुप्रीम कोर्ट की सं वेधनिक खं डपीठ )

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1.

2.

🕊️
20.1.19 Interim-Budget-2024 : Amnesty for Small Tax Payers / Case withdrawal
To give relief to small tax payers, Govt will withdraw small cases IF
Case Year if direct tax case is not more than _ _ _ Rupees
1962 to 2009–10 ₹25,000
2010–11 to 2014–15 ₹10,000
This will help about 1 cr tax payers.

20.1.20 🔖 ITR / income tax return form – highest ever

- It is a prescribed form through which person/company needs to disclose income and pay direct
taxes.
- ITR forms have different form numbers such ITR-1 (Sahaj), ITR-4 (Sugam), ITR-2 etc.
depending on the type of taxpayer (salaried-employee, freelance-professional, company etc)

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 Year 2021-22 2022-23
No. of ITRs filed 5.83 crores 6.77 crores

20.1.21 🔍 Income Tax : E-Governance Initiatives in Modi-Raj

- This software monitors the TDS/TCS, e-commerce websites (e.g. Amazon
Non- Filers
se iPhone buying) etc. to identify the people who are doing high-value
Monitoring
transactions, but not filing income tax return (ITR) forms.
System (NMS)
- - Then IT Dept issues notice to such people / tax-evaders.
- TDS Reconciliation Analysis and Correction Enabling System (TRACES) -
TDS: TRACES is a web portal of the Income Tax Department.
Portal / Refund - Helps in deposit & refund of TDS/TCS.
Banker SBI
- Refund is delivered to tax payer via Refund Banker SBI via
NEFT/RTGT/Cheque.(Ref: Pillar#2A1: TDS and refund)
Income Tax Dept. hired L&T Infotech ltd to develop an integrated platform for
data mining & tracking tax evaders.
Project Insight
(Related) Project Saksham 2016: CBEC/CBIC’s project for digital re-engineering
2017 related to GST. It’s not a ‘drive against black money’ but for ‘Ease of Paying Taxes’.
- (Related) Aaykar Setu: CBDT’s mobile app to pay Income Tax.
- Computer Assisted Scrutiny Selection
CASS
- Income Tax Department uses it to select cases for raid/prosecution.

23.6 📥🚆📮 B UDGET → REVENUE PART

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23.7 📤⏰(🌽⛽️️) R EVENUE EXPENDITURE → SUBSIDIES

24 📥🗓 B UDGET → CAPITAL PART

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20.1.22 🗓📤 Budget → Capital Part → Effective Capital Expenditure

🙋🏼‍♀️What does above chart mean? Ans. Explained in the video lecture. 👩🏻‍🏫
20.1.23 🗓📤 Capital expenditure for a Company
Capital Expenditures of a company = the amount of money invested by the company in (income
generating) assets such as:
🏭Tangible Assets भौतिक सं पत्तियां 💿 Intangible Assets अमूर्त सं पत्तियां
Patents for vaccines, copyright for
Land, Buildings, Vehicles,
books/music/movies/softwares, Brand-logo, Trade secret
Equipment
formulas (e.g. KFC burger, Cocacola),
Raw material and Unsold inventory License fees (e.g Software, mining, telecom etc) (Ref:
(finished goods) Pillar#5- Infra)
Investments made in the
Clients’ database / mailing list
shares/bonds of other companies.
Accounts receivable (Ref#1C) Goodwill (Ref: Pillar#1C - eg Byjus buying Whitehall jr.)
Cash & deposits in bank account Website domain name
We can further sub-divide these assets into current assets, financial assets, fixed assets. More of that
in Pillar7: Microeconomics.
🔠 MCQ. With reference to the expenditure made by an organisation or a company, which of the
following statements is/are correct ? (कं पनी द्वारा किए गए ख़र्च के बारे में सही वाक्य ढूँढो) (Prelims-2022)
1. Acquiring new technology is capital expenditure. (नई प्रौद्योगिकी को ख़रीदना पूंजीगत ख़र्च है)
2. Debt financing is considered capital expenditure, while equity financing is considered revenue
expenditure. (ऋण-द्वारा वित्तपोषण को पूं जीगत ख़र्च माना जाता है जबकि इक्विटी/शेयर वित्तपोषण को राजस्व ख़र्च माना जाता है।)
Codes: (a) 1 only (b) 2 only. (c) Both 1 and 2. (d) Neither 1 nor 2
🔠 MCQ. How many of the above are considered intangible investments? (Prelims-2023)
1. Brand recognition 2. Inventory 3. Intellectual property 4. Mailing list of clients
Codes: (a) Only one (b) Only two (c) Only three (d) All four

25 💼🤲🏻 T YPES OF DEFICITS: घाटे के प्रकार

20.1.24 💼🤲🏻
Types of Budget- Surplus, Deficit, Balanced
- If government’s income >> its expenditure it will have a surplus budget/ अधिशेष बजट
- If government’s expenditure == its income, it will be a balanced budget/ सं तुलित बजट
- If government’s expenditure >> its income, it’ll be a deficit budget/ घाटे का बजट

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20.1.25 🐘 Yudhishthir Disclaimer on Deficit Formulas

20.1.26 💼🤲🏻 Budget Deficit (बजट घाटा)

Budget Deficit refers to the excess of total expenditure (both revenue and capital) over total receipts
(both revenue and capital).
From the 1997-98 budget, Govt has stopped the practice of showing budget deficit.

20.1.27 💼🤲🏻 Fiscal Deficit - formula Tamilnadu Textbook

Fiscal Deficit = Budget Deficit plus Borrowing. This borrowing includes internal borrowing [such as
through Small Savings Scheme, and the G-Secs subscribed by Banks/NBFCs) + Borrowing from RBI] +
External Borrowing. (as per Tamilnadu TextBook & government’s official calculation method)

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20.1.28 💼🤲🏻Fiscal Deficit - formula NCERT Textbook (two formulas)
- 1) FD = Total expenditure – (Revenue receipts +Non-debt creating capital receipts).
- 2) FD = difference between the govt’s total expenditure & its total receipts excluding borrowing

• Fiscal Deficit related famous committee= Sukhmoy Chakravarti Committee (1997-98)

🔠❓MCQ. The excess of total expenditure of Govt over its total receipts, excluding borrowings, is
known as _ _ _ (CDS-2021-i)
(a) Primary deficit (b) Fiscal deficit (c) Current deficit (d) Capital deficit

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20.1.29 💼🤲🏻 Gross Fiscal Deficit (GFD) vs NET fiscal Deficit

➔ Gross Fiscal Deficit = Net borrowing at home + Borrowing from RBI + Borrowing from
abroad (सकल राजकोषीय घाटा)
➔ Net Fiscal Deficit = Gross Fiscal Deficit (GFD) minus the net lending of the central
government. (शुद्ध राजकोषीय घाटा)
🚩👶🏻 FAQ: RBI is also ‘at home in India’ so why show it separately in formula? Ans. NCERT given it
like that. so u’ve to prepare. NCERT didn’t bother to explain “WHY” so I didn’t bother to PHD.

20.1.30 💼🤲🏻 Primary Deficit (प्राथमिक घाटा)

• PD = Fiscal Deficit minus interest to be paid on previous loans (राजकोषीय घाटे में से पुराने ऋण/कर्ज
पर जो ब्याज चुकाना है उसे हटा दीजिए.)
• 1993: Finance Minister Manmohan Singh’s budget speech mentioned it.

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 • If the government continues to borrow year after year, it leads to accumulation of debt and
the government has to pay more and more interest. These interest payments themselves add
more burden to borrow next year. (पुरानी लोन पर जो ब्याज चुकाना है उस रकम को घाटे की गिनती में नहीं लेना
चाहिए)
• So, to get a clearer picture of how much is the government borrowing for new programs,
they look at another indicator: (ताकि नए वर्ष में विकास के काम के लिए इतना वास्तविक कर्ज लिया जा रहा है
उसका पता चले)

20.1.31 💼🤲🏻 Gross Primary Deficit (GPD: सकल प्राथमिक घाटा)

Gross primary deficit = Gross fiscal deficit MINUS Net interest liabilities.

🚩👶🏻
- FAQ : 1) Formula for net primary deficit? Ans. Similar to above. i.e. = Net Fiscal Deficit
minus net interest liabilities = Net Primary Deficit.
🚩👶🏻
- FAQ : 2) difference between Primary Deficit vs Gross Primary Deficit. Ans. Read Yudhisthir
disclaimer on deficit formulas.
🚩👶🏻
- FAQ : 3) Shouldn't "X" thing have Plus sign or Minus sign? Ans. Accept & memorize.

25.1 DEFICIT GRAPH / DATASETS

Year 20–21 21–22 22–23 23–24 24–25 Financial Year (FY) 25–26
Fiscal 9.2 6.7 6.4 5.8 5.1 Target below 4.5 (as per 👛
Deficit (%) Budget-2023)

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25.2 🔀💸A UTOMATIC STABILIZERS (स्वचालित-स्थिरीकारी)

 Automatic stabilizers are mechanisms built into govt budget to address economic slowdown
automatically- by automatically increasing govt’s spending and/or decrease public’s tax liability.
[“स्वचालित-स्थिरीकारी’ - आर्थिक मं दी के दौरान अपने आप सरकारी ख़र्च को बढ़ाता है या जनता की कर-देयता को कम करता है]
 Automatic stabilizer does not require any change in the existing tax law or voting in the
Parliament- because it starts working automatically during slowdown. [उन्हें क्रियान्वित करने के लिए
अलग से नया क़ानून/ सं सद की अनुमति लेने की ज़रूरत नहीं होती. वो अपने आप ही क्रियान्वित हो जाता है]
 Examples of Automatic Stabilisers: Income tax, Corporation tax, unemployment allowance,
food subsidy and other Government schemes that are meant only for poor /lower middle class
people. [आयकर, निगम कर, गरीब के लिए लक्षित खाद्य सब्सिडी और दूसरी कल्याणकारी योजनाएं - “स्वचालित-स्थिरीकारी’ है]

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Note: Countercyclical fiscal policy / fiscal stimulus = it requires the government to pass a new
budget / new law / permission of Parliament for some new initiatives. So, they are not automatic
stabilisers. They are discretionary stabilisers. [प्रति चक्रीय राजकोषीय नीति तथा राजकोषीय प्रोत्साहन पैके ज के लिए
सरकार ने अलग से विशेष रूप से नए बजट में ज़िक्र करना होगा कोई क़ानून पास करवाना होगा इसलिए वे विवेकाधीन स्थिरीकारी है।]

🔠❓MCQ. Which one of the following functions as an automatic stabilizer in the context of fiscal
and monetary policies of an economy? (UPSC-CAPF-2021)
(a) Personal income tax (b) Reverse repo rate of bank (c) Open market operation (d) Bond price.

20.1.32 🍋 Tax multiplier is a negative multiplier

🍋
20.1.33 Disposable income & marginal propensity to consume (MPC)
• Disposable income = Personal income -minus Personal income taxes.
• Disposable income means the money that is available for consumption (spending) and
saving after paying the direct taxes (e.g. Income tax).

20.1.34 🍔 Autonomous expenditure multiplier (AEM) & Government expenditure multiplier

Multiplier Meaning
• Autonomous expenditure= you have to buy it irrespective of
Autonomous expenditure your income level e.g. food, shelter, medicine.
multiplier (AEM) • AEM = ↑/↓ change in autonomous spending will result in
how much ↑/↓ in GDP/income/output
Government expenditure ↑/↓ change in Government expenditure will result in how much
multiplier ↑/↓ in GDP/income/output
↑/↓ change in Unit (Tax & Govt Expenditure of a balanced budget)
Balanced budget multiplier will result in how much ↑/↓ in GDP/income/output
(see next section for more)
⚖️
20.1.35 Balanced budget multiplier = 1 how?
• Note: the real explanation requires complex graphs and lengthy narration. We don’t have
time for it. So, I am giving a technically not accurate / jugaad-explanation.

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 • GDP = C+I+G+X-M (Will understand this formula in pillar4D)
• now suppose, I = 0, X = 0 and M = 0. Then GDP = Consumption + Govt expenditure
Matter Consumption (C) + Govt expenditure (G) C+G =GDP
BEFORE 200 100 300
100 ↓ (reduced due tax multiplier ki 200 ↑ (increased by govt 300
AFTER
negative effect) Expenditure) (unchanged)
in the above, example, GDP has increased by how much times? Ans 300/300 = 1X times only!
• Above problem will come in balance budget because,
• if government wants to increase expenditure (while keeping the budget balanced, without
borrowing) → Govt will have to increase the taxes → will reduce the consumption (due to
negative tax multiplier)

20.1.36 💼🤲🏻 THREE Functions of Govt Budget

Function Example / Meaning

Government provides certain goods and services which cannot be provided by the
Allocation market e.g. national defence, police, roads, railways etc. These are called public
goods.
Redistribution Collect more taxes from the rich and use it for welfare of the poor.
During the economic slowdown, govt should spend more money to stabilise the
Stabilisation
economy. Read the “counter-cyclic fiscal policy” section for more.

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20.1.37 💼🤲🏻 Effects of Budget/Fiscal policy on Demand & Savings

25.3 👜G ENDER BUDGET (लैंगिक बजट)

Not required in Constitution / any law. But within general budget, this data presented since 2005.

Amt in ₹Cr 2022–2023 Budget-2023 Int- budget 2024

Part-A (100% goes to women) 84811.04 88044.21 112394.15
PART-B (min. 30% goes to women) 132612.34 135175.54 197295.95
Total A+B= 217423.38 223219.75 309690.10

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25.4 📯🧔T YPES OF SCHEMES (योजनाओं के प्रकार)

 For any Union Territory without Legislature: 100% funding by Union for any scheme in any
category. ✋We will look at the schemes’ features in the respective pillars.
 To disburse scheme ₹ & monitor it effectively, FinMin →Dept of Expenditure Controller
General of Accounts (CGA) → Public Financial Management System (PFMS) webportal.

20.1.38 📯🧔Ministry-wise Highest Allocation (amt in ₹ lakh crore) in 👛Interim-Budget-2024:

If you've more time, you may prefer more datasets/graphs from

https://www.indiabudget.gov.in/doc/Budget_at_Glance/budget_at_a_glance.pdf

20.2 WIN## SERIES- WHAT IS COVERED IN THE PAST?

निम्न चीज़ें हम पहले ही पढ़ चुके हैं. आपने नहीं पढ़ा → तो उसमें से देख लेना
Missed previous classes / handouts? Visit Mrunal.org/win24
Red highlight.= I find them less important for the 2024 prelims.

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20.2.1 Win20: already covered Following in Pillar#2
• 📘📘 Economic Survey (आर्थिक सर्वेक्षण)
• 🍋🤷♀️Taxation → Direct Taxes updates after Prelims-2019
• 🍋🤷♀️: 🏦 Corporation Tax Cut in 2019-Sep
• 🍋🤷♀️: 🏦🌱 Corporation Tax on Startups
• 🍋🤷♀️: 🗃 Dividend Distribution Tax (DDT: लाभांश वितरण कर)
• 🍋🤷♀️: 🗃🛒 Buyback Tax (शेयर की वापसी-खरीद पर कर)
• 🍋🤷♀️: 🏠🎨💍Capital Gains Tax (CGT: पूंजीगत लाभ कर)
• 🍋🤷♀️: 👪 Income Tax on Individuals (व्यक्तिक आयकर)
• (Optional) New slabs for Income Tax in Budget-2020
• 🍋🕵🏻🌱Direct Tax Code (DTC) Task Force (2017-2019)
• 🍋👨🏫✂️Tax Deducted at Source (TDS): (स्रोत पर कर कटौती)
• 🍋🏎✂️Tax Collected at Source (TCS): (स्त्रोत पर सं गृहीत कर)
• 🍋🤧🔨Taxation Ordinance 2020 (कराधान अध्यादेश)
• 🍋🛒 Taxation → Indirect Taxes updates after Prelims-2019
• 🍋🛒: 🧔👩🦲🕉 GST Council: Composition? जीएसटी परिषद
• 🍋🛒 GST on J&K
• 🍋🛒:⚖️🕵️♂️Goods and Services Tax Appellate Tribunal (GSTAT)
• 📈 GST Revenue Collection Figures: जीएसटी राजस्व प्राप्ति के आंकड़े
• 🚛🧾 E-Invoice System
• 🧔 → 🤑(👩🦲👳♀️) Compensation to States → Controversy
• 🍋 [🧔⚖️(👨🦲👳🏻♀️👳🏻)] 15th Finance Commission’s First report
• 🍋 [👨🦲⚖️👳🏻♀️⚖️👳🏻]15th FC: Horizontal devolution: States’ share in ⬇ order
• 🧕Finance Commissions & the fate of UTs of J&K & Ladakh
• 🧔 → 💸🤲🏼 (👨🦲👳🏻♀️) Grants from Union to States (सं घ से राज्यों को अनुदान)
• 💸🤲🏼🏕15th FC: Local Bodies Grants (स्थानीय निकाय अनुदान, 90k cr)
• 💸🤲🏼🤦🏼♂️Post-Devolution Revenue Deficit Grants (74kcr)
• 💸🤲🏼🌬🌪15th FC: Disaster Management Grants (आपदा प्रबं धन अनुदान: 41kcr)
• 💸🤲🏼🍽15th FC: Sector Specific Grants (क्षेत्र-विशिष्ट अनुदान, ~7700cr)
• 💸🤲🏼🙋🏿15th FC: Special Grants: (विशेष अनुदान , ~6700kcr)
• 💸🤲🏼💪🏿 15th FC: Performance-based incentives (निष्पादन-आधारित प्रोत्साहन)
• 15th FC: Other recommendations to Govt
• 15th FC Report for 2020-21: conclusion
• 🍋👺)💼 Tax Evasion → Full-Budget-2019 Announcements
(
• 🍋🛒👺🙌 Sabka Vishwas L.D.S Scheme 2019

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 • 🍋👺🙌 Vivad se Vishwas Scheme for Direct Taxes (Budget-2020)
• 🍋👋🤵 Tax Avoidance through Non-Resident Status
• 💼 (Full) Budget-2019: Ease of paying taxes & reducing tax-terrorism
• 🍋🕵🏻:🧾 Document Identification Number (DIN: दस्तावेज़ पहचान सं ख्याक)
• 📯📜 Taxpayers’ Charter in 💼 Budget-2020 (करदाताओ का अधिकारपत्र)
• 📘📘 ES19: “Use Behavioural Economics to improve Tax Compliance”
• 📤⏰(🌽⛽️️) Budget → Revenue Expenditure → Subsidies
• Subsidies in budget 2020
• 📘📘 ES19: Use ‘Behavioural economics (व्यवहार अर्थशास्त्र)’ to ↓ subsidy bill
• 🏃🏻♀️✍🏻🕵️♂️National Recruitment Agency (NRA: राष्ट्रीय भर्ती एजेंसी)
• 💼🤲 Budget → Capital Reciepts → Borrowing
• 💼🤲🎅Full Budget-2019: Foreign Borrowing in Foreign Currency
• 🧔🗃 ♐️🤵 Budget → Capital Receipts → Disinvestment: विनिवेश
• 📔📔ES20 Vol1 Ch9 Privatization and Wealth Creation
• 💼🤲🏻 Budget → Fiscal Deficit (राजकोषीय घाटा)
• 💼🤲🏻👜🤲🏻 Extra-Budgetary Resources (बजटेतर सं साधन)
• 💼💉 🧔 Modi’s Fiscal Stimulus (2019-)
• 🙌 FRBM: Trigger Mechanism (to) Escape (Deficit control) Clause
• 💼🤲🏻🔨 🗂 FRBM Act: 3 Documents (दस्तावेज़)
• 💼🤲🏻⏬ Fiscal Consolidation (राजकोषीय एकत्रीकरण)
• 👻ATMANIRBHAR Bharat
• 🧔🗃 → 👨💼 Strategic Disinvestment of CPSE in 👻ATMANI
• 🧔🕉👨🦲Fiscal Federalism: Helping the States in 👻ATMANI
• 🧔🕉👨🦲Helping States → Tax devolution and grants
• 🧔🕉👨🦲Helping States → States’ Fiscal deficit limits ⏫
• 💼🤲🏻 Fiscal Deficit: new developments
• 💼🤲🏻 Fiscal Deficit ⏫= India sovereign rating ⭐️⭐️⏬
• 🤧🤲Donation Funds: PMNRF vs PM CARES (दान)
• 🔪🗃♾ (Suggestion) Consol Bonds to mobilize funds for Corona revival
• 👿ATMANIRBHAR: Criticism (आलोचना)
• ✍️👴🧔 Conclusion: 👿ATMANIRBHAR Self Reliance: Nehru vs Modi

• 🙋♀️Alternate Suggestions to revive Economy: अन्य सुझाव

20.2.2 Win21: already covered Following in Pillar#212
• 🍋🤷♀️Budget 2021: Taxation- updates and data

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• 🍋 Net Tax Revenue of the Govt (शुद्ध कर राजस्व)
• 🍋 Revenue Shortfall (राजस्व में कमी)
• 🍋🤷♀️: 🏦 Direct Tax → Corporation Tax (निगम कर)
• 🍋🤷♀️: 🏦🌱: 🤓 Corporation Tax: Exemption from audit for small companies
• 🍋🤷♀️: 👪 Direct Tax → Income Tax on Individuals (व्यक्तिक आयकर)
• 🍋🕵🏻🌱Income Tax Slabs in Budget-2021, Compliance relief to Senior Citizen👴
• 🍋🛒💊Indirect Tax → Customs Duty (सीमा शुल्क) in Budget-2021
• 🍋🛒🏋🏻♀️Excise & Customs Cess and Surcharges in recent years
• 🍋🛒Indirect Tax → ⛽️️Petrol & Diesel price⏫ because
• 🍋🛒Indirect Tax → Goods & Services Tax (GST)
• 🍋🛒Indirect Tax → 💊GST Rate ⏬ on Corona Related Items (2021-Jun)
• 🍋🛒Indirect Tax → 📈 GST Revenue Collection Figures: जीएसटी राजस्व प्राप्ति के आंकड़े
• 🍋🛒⏰🗓 GST Mechanism: Quarterly Returns and Monthly Payment of Tax (QRMP)
• 🍋🛒: 💸🤏(😈) 1% GST deposit in cash for controlling fake ITC claims
• 🧔 → 🤑(👩🦲👳♀️) Compensation to States: HOW?
• 🤧😷:🧔 → 🤑(👩🦲👳♀️) GST Compensation & Back2Back Loans
• ✍️Conclusion : GST compensation (निष्कर्ष)
• 🍋 (🧔⚖️👨🦲👳🏻♀️👳🏻) Taxation → Finance Commission
• 🍋 [👨🦲⚖️👳🏻♀️⚖️👳🏻] Tax Devolution among States, Horizontal Devolution Formula
• 🍋 [👨🦲⚖️👳🏻♀️⚖️👳🏻]15th FC: Horizontal devolution: GRANTS to States
• 💸💣🧨15th FC recommends Defence and Internal Security Fund for Union
• 🤏 15th FC: Other recommendations to Govt (सरकार के लिए अन्य सिफारिशें)
• 🍋👺🕵🏻 Taxation → Black Money & Allied Issues
• 🍋👺🥛 Tax: GDP: 15th Finance Commission on how to improve it?
• 🍋👋🤵 Global Minimum Tax: G7 framework (वैश्विक न्यूनतम कर)
• 🍋🍋🍋🕵🏻: 🙇🏻 Reforms to reduce Tax Terrorism / Harassment
• 🍋👺🙌 Dispute Resolution Committee (DRC) in Budget-2021
• 🍋🍋🍋🕵🏻: 🙇🏻: ️Cash Transaction Limit Relaxed for Corona
• 🍋🍋🍋🕵🏻:🧾 Faceless interaction between Tax payers and Tax official
• 🍋🍋🍋🕵🏻:🧾⏰ Time limit on opening of past cases
• 📯🍋📜 Taxpayers’ Charter in 💼 Budget-2020 (करदाताओ का अधिकारपत्र)
• 📯🍋📜 (Indian) Tax Payers' Charter released in 2020-Aug
• ✍️📯🍋📜 Conclusion: Tax Payers' Charter
• 🍋🙇🏻: 🧜♂️🦸♂️Tax Ombudsman in Economic Survey 2021
• 📤⏰ Budget → Revenue Expenditure (राजस्व खर्च/ व्यय)

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 • 📤⏰(🌽⛽️️) Revenue Expenditure → Subsidies
• 👻📤⏰👨💼🥳 Revenue xpdr → Salaries→ Atmanirbharat 2.0 (Oct 2020)
• 👻⏰👨💼🥳 Atma-Nirbhar 2.0: Festival Advance Scheme (त्योहारों में एडवांस रकम)
• 👻⏰👨💼🥳 Atma-Nirbhar 2.0: LTC Cash Voucher Scheme
• (📥<📤)⏰⚠️Revenue Deficit (राजस्व घाटा: 5.1% of GDP)
• 📥🗓 Budget → Capital → Receipts
• 💼🤲🎅Budget-2021: Foreign Borrowing
• 👻🧔🗃 → 👨💼 Disinvestment- New Policy in Budget-2021
• 👻🧔🗃 → 👨💼: Disinvestment Target Amount vs Achievement
• 👻🧔🔪👨🦲🏗Atmanirbharar 2.0 (2020-Oct) → State CAPEX Loans
• 💼🤲🏻Fiscal Deficit: राजकोषीय घाटा
• 💼🤲🏻Debt Composition: Amount-wise and type wise
• 💼🤲🏻👜🤲🏻 Extra-Budgetary Resources (बजटेतर सं साधन)
• 💼🤲🏻 Financing the deficit: its negative consequences on economy:
• 💼🤲🏻 ⏫:🛒⏬Ricardian Equivalence invalid for India says ES21
• 💼🤲🏻 Financing the deficit: “Crowding Out” of private borrowers
• 💼🤲🏻 Fiscal Deficit ⏫= sovereign rating ⭐️⭐️⏬ =don’t worry says ES21
• ⭐⭐️ ️Rating downgrade: conclusion or way forward
• 💼💉💸💸Countercyclical policy (प्रतिचक्रीय राजकोषीय नीति)
• 💼💉💸💸Countercyclical: IRGD & Debt Sustainability
• 💼📤🤺 Fiscal Consolidation / Prudence: राजकोषीय एकत्रीकरण / विवेक
• 👻💼💉 🧔 Modi’s Atma-Nirbhar Bharat Economic Stimulus Package (2020)
• 👻🧔🕉👨🦲Fiscal Federalism: Helping the States in ATMANIRBHAR
• 🧔🕉👨🦲Helping States → States’ Fiscal deficit limits ⏫
• 🧔🕉👨🦲Fiscal Deficit target for States by 15th FC & Budget-2021
• 💼🤲🏻🔨🕵🏻 Fiscal Responsibility: NK Singh’s 15th Finance Commission
• 💼🤲🏻🔨🕵🏻 :🎯 Budget marksmanship is Poor, says 15th FC
• 💼 Budgeting: बजट बनाने की क्रिया
• 📯🧔Ministry-wise Highest Allocation in Budget-2021
• 💼🖋Treasury Single Account (TSA) System
20.2.3 Win22: already covered Following in Pillar#2
• 💼 Fiscal Policy (राजकोषीय नीति): Meaning & significance
• 🔐Three Funds related to Budget (Self-Study= Laxmikanth chapter on Parliament)
• 👜🥻Budget’s THEME (बजट की विषयवस्तु)

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• 📘📘 Economic Survey (आर्थिक सर्वेक्षण)
• 📙📙ES22 - WHY Single Volume instead of two volumes?
• 📙📙ES22 – WHY prepared by Principal Economic Adviser?
• 📙📙🕵🏻Chief Economic Advisor (CEA: मुख्य आर्थिक सलाहकार)
• 🕵🏻Finance ministry and its departments: (वित्त मंत्रालय और उसके विभाग)
• 🕵🏻🏭FinMin#6: DPE → National Land Monetization Corporation (NLMC-2022)
• 🍋🤷♀️: 🏦 Direct Tax → Not much updates
• 🍋🤷♀️: 🏦 Direct Tax → Corporation Tax (निगम कर)
• 🍋🤷♀️: 🏦🐷 Minimum Alternate Tax (MAT: न्यूनतम वैकल्पिक कर)
• 🍋🤷♀️: 🏦🐷 Cooperative Societies: Alternative Minimum Tax (AMT)
• 🍋🤷♀️: 👪 Income Tax on Individuals (व्यक्तिक आयकर)
• 🍋🤷♀️: 🏠🎨💍Capital Gains Tax (CGT: पूंजीगत लाभ कर)
• 🍋👨🏫✂️Tax Deducted at Source (TDS): (स्रोत पर कर कटौती)
• Other Taxes- Google tax, Buyback Tax, etc.
• 💼BUDGET→ ⏳REVENUE PART→ 📥RECEIPTS→ 🍋TAX →🛒 Indirect Taxes
• 🍋🛒⛽️Indirect Tax → additional differential excise duty on Unblended Petrol
• 🍋🛒⛽️: GST on Petrol Diesel Electricity: NITI Aayog 6 year roadmap
• ⛽️Petrol-Diesel: Dynamic Fuel Pricing System & oil bond repayment
• 🍋🛒🏋🏻♀️↗️🏋🏻♀️Cascading Effect of Indirect Taxes & GST reform
• 🍋🛒🤑 GST Input Tax Credit (ITC: इनपुट कर प्रत्यय)
• 🍋🛒↩️Inverted Duty Structure Problem in GST on Textile
• 💿GST: Exempt vs ZERO RATED
• 💉Vaccine GST can’t be 0% ZERO RATED or “EXEMPTED” because
• 🍋🛒🧔🌬 Centre’s Indirect Taxes subsumed in CGST
• 🍋🛒(👩🦲🕉)🌬 States’ Indirect Taxes subsumed in SGST
• 📈 GST Revenue Collection Figures: जीएसटी राजस्व प्राप्ति के आंकड़े
• 🕵♂️(🍋 🧔⚖️👨🦲) Fifteenth FC Composition (setup in 2017-Nov)
• 🧔 → 💸🤲🏼 (👨🦲👳🏻♀️) Grants from Union to States : 15th FC
• 🍋👺🕵🏻 Taxation → Black Money & Allied Issues
• 🍋👋🤵 Double Taxation Avoidance Agreement (DTAA) & Round Tripping
• (🍋👋🤵:⌛️) 🕵🏻 Retrospective Tax: Vodafone
• (🍋👋🤵:⌛️) 🕵🏻 Retrospective Tax: Cairn Energy

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 • 🍋👋🌐:🤵 Global Minimum Tax: G7 Framework
• 🍋👋🌐:🤵 G7-OECD “Two” Pillar Solution for Global Minimum Tax
• 🍋👋🌐:🤵 Conclusion- Global Minimum Tax: निष्कर्ष
• 🍋🍋🍋🕵🏻: 🙇🏻 Reforms to reduce Tax Terrorism / Harassment
• 🍋🍋🍋🕵🏻:🧾Updated Return Form to correct errors- in 👜🥻Budget-2022:
• 🍋🥛 Tax: GDP – DATA GRAPH
• 🍋 Net Tax Revenue of the Govt (शुद्ध कर राजस्व)
• 🍋 Revenue Shortfall (राजस्व में कमी)
• 📥🚆📮 Budget → Revenue Part → Receipts → Non-Tax Receipts
• 📤⏰ Budget → Revenue Expenditure (राजस्व खर्च/ व्यय)
• 📤⏰(🌽⛽️) Revenue Expenditure → Subsidies
• (📥<📤)⏰⚠ Revenue Deficit & ERD (राजस्व घाटा)
• 📥🗓 Budget → Capital → Receipts (पूँजीगत प्राप्तियाँ)
• 💼🤲🎅Budget-2022: Foreign Borrowing (विदेशी क़र्ज़)
• 🧔🗃 ♐️🤵 disinvestment
• 🧔🗃 ♐️🤵 Strategic disinvestment of Air India
• 🧔🗃 ♐️🤵 Disinvestment targets in budgets:
• 🗓📤Budget → Capital Part → Expenditure (पूंजीगत व्यय)
• 💼🤲🏻Types of deficits: घाटे के प्रकार
• 💼🤲🏻🔨 Fiscal Responsibility & Budget Management Act, 2003
• 💼🤲🏻Debt Composition: Amount-wise for Union
• 💼💉💸💸Countercyclical policy (प्रतिचक्रीय राजकोषीय नीति)
• 🧔🕉👨🦲Fiscal Deficit target for States by 15th FC & Budget-2021
• 📯🧔Types of schemes (योजनाओं के प्रकार)
• 👜🥻Budget-2022: CSS rationalisation
• 📯🧔Ministry-wise Highest Allocation
20.2.4 Win23 covered following topics in Pillar2
• 💼🍋 Pillar #2: Budget: Relevance in UPSC?
• 💼 Budget Presentation (बजट प्रस्तुति)
• 👜🥻 Budget’s THEME (बजट की विषयवस्तु)
• 📘📘 Economic Survey (आर्थिक सर्वेक्षण)
• Budget → Revenue Part →
• 🍋🤷‍♀️ 🏦
: Budget → Revenue Part → Direct Tax

Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 158
• 🍋🤷‍♀️: 🏦 Direct Tax → Corporation Tax (निगम कर)
• 🍋👋🤵 Angel Tax on Startup Investments (2012)
• 🍋🤷‍♀️: 👪 Income Tax on Individuals (व्यक्तिक आयकर)
• Revenue Forgone / Tax Expenditure (परित्यक्त राजस्व/कर खर्च)
• Income Tax: no tax upto ₹7 lakh after 👛Budget-2023 = Boosting Economy
• Income Tax: switching between NTR vs OTR after 👛Budget-2023
• Surcharge on Income Tax
• Effective Tax on super-rich person earning >5 cr
• 👱🏻👴🏻 Income Tax Slabs -> old tax regime -> senior citizens
• 💼 ⏳ 📥
BUDGET→ REVENUE PART→ RECEIPTS→ TAX → Indirect Taxes 🍋 🛒
• 🛒 Indirect Taxes → Customs Duty in Budget-2023👛
• 🛒 Indirect Taxes → ⛽️🛳 Windfall Tax on export of petrol/diesel/ATF fuel (2022)
• 🛒 Indirect Taxes → NCCD Tax on tobacco products
• 🍋🛒🤑 Indirect → Goods and Services Tax (GST)
• 🍋🛒🍋 GST Rates on Goods : 0% removed
• 🍋🛒🕵️‍♂️ GST Related Organizations (सं स्थाए)
• ⚖️🕵️‍♂️🍕 National Anti-Profiteering Authority (NAA/NAPA)
• 🕵️‍♂️ 🕵️‍♂️ 🕵️‍♂️
GST tribunal (GSTAT) (2023)
• 🕵️‍♂️
GST Fitment Committee (जीएसटी फिटमेंट समिति)
• ️GST Ease of Doing Biz (EoD): decriminalisation of certain offences
• ️GST-EoD: criminal prosecution threshold
• ️GST-EoD: obstructing officers
• 🍋 🧔⚖️👨‍🦲👳🏻‍♀️👳🏻
( ) Taxation → Finance Commission
• 🍋👺🕵🏻 Taxation → Black Money & Allied Issues
• 🍋 Tax : GDP
• 🍋 Tax Collection Numbers
• Revenue Shortfall
• ️Tax buoyancy (कर उत्प्लावकता):
• Black Money – Minor development
• Financial Action Task Force (FATF-1989: HQ@Paris
• PMLA Reporting Norms to apply on Crypto-exchanges (2023)
• TDS on influencers / influencer tax
• 💸 Black Money → Demonetisation SC verdict
• → Budget → Revenue Expenditure (राजस्व खर्च/ व्यय)
• 📤⏰ 🌽⛽️( ) Revenue Expenditure → Subsidies
• 📥🗓 Budget → Capital → Receipts
• 💼🤲🎅 Budget-2023: Foreign Borrowing
• 🧔🗃 ♐️ 🤵 Disinvestment & Privatization in the Modi Raj
• 👻🧔🔪👨‍🦲🏗 State CAPEX Loans
• 🗓📤 Budget → Capital Part → Effective Capital Expenditure
• 💼🤲🏻 Types of deficits: घाटे के प्रकार
• Fiscal glide
• 💼🤲🏻 Debt Composition: Type-wise
• 🧔🕉👨‍🦲 Fiscal Deficit target for States
• 💼🤲🏻👜🤲🏻 Extra-Budgetary Resources (बजटेतर सं साधन)

Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 159
 • 💼💉💸💸Countercyclical: IRGD & Debt Sustainability
• ️Frontloading of Stimulus and Overheating in Economy
• 📯🧔Types of schemes (योजनाओं के प्रकार)
• 📯🧔Ministry-wise Highest Allocation (amt in ₹ lakh crore)
• Gender Budget
• Govt Schemes: Result Based Financing instead of input based financing

20.3 🔠M OCK TESTS KA MAHA-PARV

UCSC (Unacademy UAIPMT (Unacademy All India

Civil Services Championship) Prelims Mock Test)
1 Day Match:
T20 type format:
• GS : 100 Q in 2 hrs
• 50 MCQs in 1 hr
• CSAT: 80 Qs in 2 hrs
🎁 Win Laptop, Gadgets, Scholarship etc Get Free Coaching for Mains, if u clear Prelims.
• 31st March
• 7th April • 14th April
• 5th May • 28th April
• 19th May • 5th May
• 9th June • 19th May
• 2nd June
https://unacademy.onelink.me/nWi1/ukmf1hzb https://unacademy.onelink.me/nWi1/c4bbv9i7

20.4 👨‍🏫📡MRUNAL’S ECONOMY COURSE FOR UPSC

Subscribe Now for 50% off & 6 Months Extra:

unacademy.com/goal/upsc-optional/KSCGY/subscribe?plan_type=plus&referral_code=mrunal.org

Next Handout: Pillar3 International Trade

Missed previous classes / handouts? Visit Mrunal.org/win24

Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 160