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Which of the following fiscal indicators best describes the difference between total expenditure and total receipts excluding borrowings?
Revenue Deficit
Fiscal Deficit
Primary Deficit
Effective Revenue Deficit
Fiscal Deficit
Fiscal deficit is defined as the excess of total expenditure over total receipts excluding borrowings. It indicates the total borrowing requirements of the government from all sources to meet its expenditures.
Fiscal deficit is defined as the excess of total expenditure over total receipts excluding borrowings. It indicates the total borrowing requirements of the government from all sources to meet its expenditures.
Budgetary policies and fiscal indicators in India are regulated under the provisions of the Fiscal Responsibility and Budget Management (FRBM) Act enacted in 2003.
Fiscal deficit indicates the total borrowing requirements of the government during a fiscal year.
Formula: Fiscal Deficit equals Total Expenditure minus Revenue Receipts and Non-debt Capital Receipts.
A higher fiscal deficit signals greater reliance on market borrowings and potential inflationary pressures.
Revenue deficit represents the excess of revenue expenditure over revenue receipts, focusing only on current operational needs.
Primary deficit is derived by subtracting interest payments from the fiscal deficit, reflecting current fiscal stance excluding past liabilities.
Option A, C, and D are incorrect as they measure specific sub-components of government finances rather than overall borrowing requirements.
B is correct тАФ Fiscal deficit measures the difference between total expenditure and total receipts excluding borrowings.
Aspirants should thoroughly memorize formulas for all four budget deficits as questions frequently interchange terms or ask for specific deductions like interest payments.
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