Economics • Indian EconomyHard
In the context of India's fiscal architecture, how is the 'Effective Revenue Deficit' precisely defined?
A. Total government expenditure minus total non-debt capital receipts
B. Revenue deficit minus grants given to state governments and autonomous bodies for the creation of capital assets✓ Correct Answer
C. Fiscal deficit adjusted for net lending to public sector undertakings and foreign sovereign debt repayments
D. Capital expenditure minus total tax revenue collected by the central government
💡 Solution & Explanation
Effective Revenue Deficit is calculated by subtracting grants-in-aid given to state governments and local bodies for capital asset creation from the standard revenue deficit, reflecting the genuine consumption shortfall of the central government. Other definitions pertain to different fiscal indicators like the primary deficit or fiscal deficit. Indian economy and budgetary terminology are core components of civil service economics syllabi.
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