Fiscal deficit of the government is best defined as:
- A.Revenue expenditure minus revenue receipts
- B.Total expenditure minus total receipts other than borrowings
- C.Total expenditure minus interest payments
- D.Capital expenditure minus capital receipts
Correct answer
Explanation
The correct answer is B. Fiscal deficit is total expenditure minus total receipts other than borrowings, which means it measures exactly how much the government must borrow during the year to meet its planned spending. That is why it is described as the total borrowing requirement and why it, rather than the other deficits, is watched by rating agencies and by the bond market.
Option A describes the revenue deficit, which compares only revenue expenditure with revenue receipts and shows borrowing used for routine running costs. Option C is close to no standard definition; subtracting interest payments is done from the fiscal deficit to arrive at the primary deficit, not from total expenditure. Option D is not a recognised measure at all, since capital receipts consist largely of the very borrowings that the fiscal deficit is meant to exclude.
Read the full article: Union Budget and Fiscal Policy: Deficits, Articles and PYQs
Practice Questions
View allWhich of the following items is included in the capital receipts of the Indian Budget?
- A.Commercial revenue
- B.Interest received
- C.Issuance of treasury bills
- D.Dividends and profits
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A receipt is capital if it either creates a liability for the government or reduces an asset it holds.
Read the full explanation →Which of the following is India's first Paperless Budget?
- A.Union Budget 2021-22
- B.Union Budget 2019-20
- C.Union Budget 2020-21
- D.Union Budget 2018-19
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It was the first union budget in India not to be printed.
Read the full explanation →As per Union Budget 2021-22, Fiscal deficit is estimated at ______ per cent of GDP in 2021-22.
- A.5.1
- B.7.6
- C.6.8
- D.7.2
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The budget estimate for the fiscal deficit of the central government in 2021-22 was placed at 6.8 per cent of gross domestic product.
Read the full explanation →The Contingency Fund of India is to be augmented from Rs. 500 crores to _________ crores through the Finance Bill as per the Union Budget 2021-22.
- A.Rs. 15,000
- B.Rs. 30,000
- C.Rs. 25,000
- D.Rs. 10,000
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The Union Budget 2021-22 proposed raising the corpus of the Contingency Fund of India from five hundred crore rupees to thirty thousand crore rupees, and the change was carried through the Finance Bill of that year.
Read the full explanation →Under which article of the Constitution is the Union Budget presented as the Annual Financial Statement?
- A.Article 110
- B.Article 112
- C.Article 114
- D.Article 123
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The Constitution nowhere uses the word budget. Article 112 requires the President to cause to be laid before both Houses of Parliament, in respect of every financial year, a statement of the estimated receipts and expenditure of the Government of India, and this statement is called the Annual Financial Statement.
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