Economics • Indian EconomyEasy
What does the term 'Fiscal Deficit' signify in the context of the Union Budget of India?
A. The excess of total government expenditure over total government revenue excluding borrowings
B. The net borrowing requirement of the government from all domestic and external sources to bridge its revenue and capital spending gap✓ Correct Answer
C. The difference between total tax revenue collected and total interest payments on past debt
D. The total outstanding debt owed by the central government to the Reserve Bank of India
💡 Solution & Explanation
The fiscal deficit measures the excess of total government expenditure over total receipts excluding borrowings, thereby indicating the net borrowing requirements of the government during a fiscal year. A higher fiscal deficit signals greater reliance on debt instruments to finance developmental and administrative spending. Managing this deficit remains a core objective of macroeconomic policy under the Fiscal Responsibility and Budget Management framework. Economy modules in competitive exams place heavy emphasis on budget indicators.
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