This set of Pavement Design Multiple Choice Questions & Answers (MCQs) focuses on “Highway Finance”.
1. What are the different methods of highway financing in use?
a) Debit financing and pre-payment
b) Credit financing and pay as you go
c) Credit financing and pre-payment
d) Debit financing and pay as you go
View Answer
Explanation: The basic principle behind financing is that the funds spent on the highways are recovered from the road users. There are two main methods of highway financing generally practised. They are pay as you go method and credit financing method.
2. What is the main source of finance for the State Government to meet road development needs?
a) CRD
b) CDR
c) CRF
d) CCF
View Answer
Explanation: CRF stands for central road fund and was introduced in the year 1929 by taxing motor fuel. However, it has been merged with the general revenue and functions as the main source of finance for the State Government to meet the needs for the development of roads.
3. In pay as you go method, the finance for the highway improvement, maintenance and operation is obtained from the ______
a) State revenue
b) Central revenue
c) Tax collection
d) Local body
View Answer
Explanation: In the method of pay as you go for highway financing, the financing is done by the central revenue. The fund can be used for the improvement, maintenance and operations of the highways. A fund is allotted for the whole project.
4. Which of the below is not a tax levied by the Central Government for highway financing?
a) Motor fuel
b) Excise duty on oil
c) Excise duty on vehicles
d) Driving license
View Answer
Explanation: The fees on the driving license is levied by the State Government and not the Central Government. These taxes levied by the Governments are used for highway financing. Taxes on motor fuel, excise duty on oil, grease, vehicles, spare parts, tire etc.… are levied by the Central Government.
5. What is the tax normally levied by the local bodies?
a) Vehicle tax
b) Passenger tax
c) Sales tax
d) Toll tax
View Answer
Explanation: Toll tax is the one that is usually levied by the local bodies for their revenue. Vehicle tax, passenger tax and sales tax are sources of income and are collected by the State Government.
6. In the credit financing system, the amount is repaid from future incomes.
a) True
b) False
View Answer
Explanation: In the credit financing system of highway financing, highway improvements are done with borrowed money. The borrowed amount along with the interest has to be returned to the provider from the future incomes made.
7. Which of the below is not a local body that is capable of levying tax?
a) Panchayat
b) Vidhan Sabha
c) District boards
d) Corporation
View Answer
Explanation: Vidhan Sabha is a State Government administrative body and not a local body. The local bodies include the municipalities, corporations, district boards and panchayats. The finance for the highway in India is done at all three administrative levels – Central, State and local bodies of the Government.
8. What does PPP stand for?
a) Public Private Property
b) Partnership for Public Property
c) Partnership for Public Proceedings
d) Public Private Partnership
View Answer
Explanation: PPP stands for public private partnership. It is a type of undertaking where the funding for the project is done by the Government and a private sector company. They draw a contract or an agreement for investing in the construction and maintenance of an asset (highways).
Sanfoundry Global Education & Learning Series – Pavement Design.
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