Economics • Indian EconomyMedium

In the computation of government budgetary deficits in India, how is the Fiscal Deficit defined?

A. The difference between total revenue receipts and total revenue expenditure

B. The excess of total expenditure over total receipts excluding borrowings and other liabilities✓ Correct Answer

C. The difference between interest payments made on public debt and total tax collections

D. The total amount of foreign currency reserves held by the central bank

💡 Solution & Explanation

Fiscal deficit measures the total borrowing requirement of the government from all sources during a financial year, calculated as total expenditure minus total receipts excluding borrowings. Revenue deficit focuses strictly on current revenue and expenditure accounts without capital transactions. Primary deficit is derived by subtracting net interest payments from the fiscal deficit. Fiscal responsibility legislation mandates targets to contain this deficit within sustainable limits.

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In the computation of government budgetary deficits in India, how is the Fiscal Deficit defined?

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