- Statement I asserts that fiscal deficit is greater than budgetary deficit. In the historical context where both terms were commonly used in India, Fiscal Deficit = Budgetary Deficit + Net increase in internal and external debt. As net increase in debt is usually positive, fiscal deficit was indeed generally greater than budgetary deficit. - Statement II provides an incorrect definition of fiscal deficit. Fiscal deficit is defined as the difference between the government's total expenditure and its total receipts (excluding borrowings). It represents the total borrowing requirement of the government. Its financing comes from various sources including market borrowings, small savings, external assistance, and drawing down cash balances, but it is not defined as just borrowings from RBI plus other liabilities. Borrowing from RBI was a historical method of financing budgetary deficit (monetization), which has largely ceased since 1997.
Statement-I: Fiscal deficit is greater than budgetary deficit. Statement-II: Fiscal deficit is the borrowings from the Reserve Bank of India plus other liabilities of the Government to meet its expenditure.
Asked in UPPCS Prelims 1999 · Topic: Fiscal Policy & Revenue (Fiscal Deficits: Concepts, measures, and financing of deficits)
More Economic Development questions
- Match List I with List II and select the correct answer using the codes given below the Lists: List I List II (Term) (Explanation) I. Fiscal de‐ A) Excess of Total Expenditure ficit over Total Receipts II. Budget B) Excess of Revenue Expenditure deficit over Revenue Receipts C) Excess of Total Expenditure III. Revenover Total Receipts less borrowue deficit ings D) Excess of Total Expenditure IV. Primary over Total Receipts less borrowdeficit ings and Interest Payments
- With reference to the Indian Public Finance consider the following statements: 1. External liabilities reported in Union Budget are based on historical exchange rates 2. The continued high borrowing has kept the real interest rates high in the economy 3. The upward trend in the ratio of Fiscal Deficit to GDP in recent years has an adverse effect to private investments. 4. Interest payments is the single largest component of the non-plan revenue expenditure of the Union Government. Which of these statements are correct?
- Interest payments is the single largest component of the non-plan revenue expenditure of the Union Government. Interest payments on the national debt have historically been, and often remain, the largest single component of the central government's revenue expenditure (previously termed non-plan revenue expenditure before classification changes).
- Fiscal Deficit of the Government of India is closest to
- Deficit financing is strongly inflationary when
- Structural Adjustment Programme in India required
- Budget deficit does NOT take into account
- India's gross fiscal deficits which was 8.3% of GDP in 2008-09 (Global Financial Crisis Period) had reached in 2020-21 (COVID-19 Pandemic period) at