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Public Finance and the Budget – UPSC GS3

This module of the GS Paper 3: Economy, Environment, S&T & Security course covers budget, fiscal policy, frbm, taxation, gst, subsidies and public debt. It has 3 study lessons and a 24-question practice quiz. Free lessons can be read in full; premium lessons show a preview.

Lessons in this module

1. The Union Budget, Fiscal Policy and the FRBM Framework

Free 7 min

The Constitution does not use the word "budget". Article 112 requires the President to cause an Annual Financial Statement to be laid before both Houses of Parliament every financial year (1 April to 31 March).…

2. Taxation in India: Direct Taxes, GST and Tax Reforms

Premium 7 min

A good tax system follows Adam Smith's canons: equity: people pay according to their ability; certainty; convenience; economy: low collection costs. Modern additions are neutrality (minimal distortion of decisions), buoyancy and simplicity. Taxes can be…

3. Subsidies, Public Debt and Fiscal Federalism

Premium 7 min

A subsidy is a payment or benefit from the government that lowers the cost of a good or service for producers or consumers. Subsidies are justified when: markets under-supply merit goods (education, health, nutrition); there…

 Module quiz: Public Finance and the Budget (24 questions)

Maps & infographics in this module

Bar chart showing the Union fiscal deficit falling from 9.2 percent of GDP in 2020-21 to a 4.4 percent target in 2025-26
Consolidation since the pandemic peak has been steady while capital expenditure was protected.
Organogram dividing the Union budget into revenue receipts, capital receipts, revenue expenditure and capital expenditure with examples
Capital items create assets or liabilities; revenue items do not.
Flowchart of the dual GST system showing CGST and SGST on intra-state sales, IGST on inter-state sales, input tax credit and settlement to the destination state
GST is a destination-based tax: the consuming state receives the revenue.
Three cards describing the GST Council membership, vote weightage and decision rule
Neither the Centre nor the states can push through a decision alone.
Timeline of Indian tax reform from the Income-tax Act 1961 to GST rationalisation and the new Income-tax Act in 2025
Reforms have aimed at simplicity, a wider base and lower rates.
Six cards summarising subsidy reform tools including DBT, PAHAL, fertiliser DBT, neem-coated urea, nutrient based subsidy and ONORC
Technology-led targeting has cut leakages, though exclusion errors must be watched.

Frequently asked questions

Lessons: The Union Budget, Fiscal Policy and the FRBM Framework; Taxation in India: Direct Taxes, GST and Tax Reforms; Subsidies, Public Debt and Fiscal Federalism.

Answer: Article 112. Art 112.

Answer: primary deficit. Primary deficit.

Answer: non-debt capital receipts. Non-debt capital receipts.

Answer: 60%. 60% (Centre 40, States 20).

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