economics medium MCQ

Which of the following equations correctly defines the 'Fiscal Deficit' of the Government of India?

  1. Total Revenue Receipts - Total Revenue Expenditure
  2. Total Expenditure - (Revenue Receipts + Non-debt Capital Receipts)
  3. Fiscal Deficit - Interest Payments
  4. Total Capital Receipts - Total Capital Expenditure

Answer: Total Expenditure - (Revenue Receipts + Non-debt Capital Receipts)

Fiscal Deficit represents the total borrowing requirement of the government. It is calculated by subtracting all receipts that do not create a liability (Revenue Receipts like taxes, plus Non-debt Capital Receipts like disinvestment or loan recoveries) from the Total Expenditure. The resulting shortfall must be financed entirely through fresh borrowings (issuing bonds) or drawing down cash balances.

Topic Public Finance - Deficits
Exam Relevance UPSC Prelims, SSC CGL, Banking
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