Economics • Indian EconomyMedium
What does 'Fiscal Deficit' represent in the context of government budgetary accounts in India?
A. The excess of total government expenditure over total non-debt receipts, indicating the total borrowing requirement of the government.✓ Correct Answer
B. The difference between revenue expenditure and revenue receipts, showing current account imbalances.
C. The total outstanding foreign debt owed by public sector undertakings to international creditors.
D. The net addition to foreign exchange reserves held by the central bank on behalf of the treasury.
💡 Solution & Explanation
Fiscal deficit measures the total borrowing requirements of the government by calculating the excess of total expenditure over non-debt receipts. Alternative deficits focus strictly on revenue accounts or interest payments without capturing capital outlays. Controlling this indicator is crucial for macroeconomic stability and inflation management.
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