High fiscal deficits in the preceding years led to significant government borrowing, and the interest payments on this debt constituted a large and growing portion of the revenue expenditure, crowding out other essential spending and contributing to fiscal unsustainability.
The following Table shows the percentage distribution of revenue expenditure of Government of India in 1989-90 and 1994- 95: Based on this table, it can be said that the Indian economy is in poor shape because the Central Government continues to be under pressure to
Asked in UPPCS Prelims 1996 · Topic: Fiscal Policy & Revenue (Public Expenditure: Classification, trends, and impact on development)
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Answer: B. spend more and more on interest payments
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