Arrange the following sources of revenue for the Government of India mentioned in the Union Budget of 2024-25 in descending order:

Question

Arrange the following sources of revenue for the Government of India mentioned in the Union Budget of 2024-25 in descending order:

i. Goods & Service Tax & other taxes

ii. Borrowing and Other Liabilities

iii. Corporation tax

iv. Income Tax

Choose the correct answer:

1. A. i, ii, iii, iv
2. B. ii, iv, i, iii (Correct answer)
3. C. iv, iii, ii, i
4. D. iii, i, iv, ii

Correct Answer

Option B — ii, iv, i, iii

Detailed Solution & Explanation

The correct answer is ii, iv, i, iii.

Key Points

• The Union Budget 2024-25 showed the rupee coming in from these sources, in descending order:

• The sequence is therefore ii → iv → i → iii.
• The single largest source of receipts is borrowing, which is why the fiscal deficit dominates budget discussion — over a quarter of every rupee spent is borrowed.

Additional Information

• Income tax has overtaken corporation tax in recent budgets, reversing the older pattern. The gap widened after the corporate tax rate cut of September 2019, which lowered the base rate to 22% for existing companies and 15% for new manufacturing companies.
• Where the rupee goes, for the same budget, in descending order: interest payments (about 19 paise), states' share of taxes and duties (about 21 paise), central sector schemes, centrally sponsored schemes, finance commission and other transfers, defence, subsidies and pensions.
• Interest payments are the single largest item of expenditure after transfers to states — the compounding consequence of past borrowing, and the reason fiscal consolidation matters.
• Key deficit definitions:
  • Fiscal deficit = total expenditure − total receipts excluding borrowings. It equals the borrowing requirement for the year.
  • Revenue deficit = revenue expenditure − revenue receipts.
  • Primary deficit = fiscal deficit − interest payments. It isolates the current year's imbalance from the legacy of past debt.
  • Effective revenue deficit = revenue deficit − grants for the creation of capital assets.
• Article 112 calls the Budget the "Annual Financial Statement" — the term "budget" appears nowhere in the Constitution.