Economics • Indian EconomyHard
In the context of India's fiscal architecture, how is the 'Effective Revenue Deficit' defined?
A. The difference between revenue deficit and grants given by the central government to state governments and autonomous bodies for the creation of capital assets.✓ Correct Answer
B. Total expenditure minus total receipts excluding borrowings and other liabilities.
C. Revenue expenditure minus non-tax revenue collections from public sector enterprises.
D. Fiscal deficit adjusted for net interest payments made on domestic and external debt obligations.
💡 Solution & Explanation
Effective Revenue Deficit is calculated as the difference between the revenue deficit and grants given by the central government to state governments and autonomous bodies specifically for the creation of capital assets. This metric was introduced to highlight the true shortfall in current operational accounts after accounting for capital formation. It helps fiscal policy analysts evaluate unproductive government consumption expenditure.
More Economics Indian Economy questions
- The Second Five-Year Plan (1956–1961) of India was based on which economic model that emphasized rapid…
- The 'PM-PRANAM' scheme, launched by the Government of India, is primarily designed to achieve which of the…
- In the context of Indian public finance, how does a revenue deficit differ from a fiscal deficit?
- Which flagship central scheme is widely utilized in rural Himachal Pradesh to provide guaranteed wage…
- What is the primary economic objective of the 'HP Shiva Project' (Sub-tropical Horticulture, Irrigation and…