Assertion (A) : Fiscal deficit is greater than budgetary deficit. Reason (R) : Fiscal deficit is the borrowing from the Reserve Bank of India plus other liabilities of the Government to meet its expenditure.
✓ Correct answer: c) A is true but R is false
ExplanationAssertion (A) is true: The fiscal deficit is the differ- ence between the government’s total expenditure and its total non-debt receipts (revenue receipts plus non-debt capital re- ceipts).It represents the total borrowing requirement of the gov- ernment.Budgetary Deficit can be termed as the excess of the total government expenditure over the total revenue generated in a financial year.The fiscal deficit is always greater than or equal to the bud- getary deficit.This is because the fiscal deficit includes all borrowings, while the budgetary deficit only looks at the gap in the revenue account.The fiscal deficit includes borro-wing to finance capital expenditure (investments in infrastructure, etc.), which is not part of the revenue account.Reason (R) is false: This is because the fiscal deficit is not solely borrowing from the Reserve Bank of India.It includes borrowing from the public, financial institutions, and external sources, as well as other liabilities like market loans and secu- rities.248
Practice more Economy PYQs
Attempt a free 10-question quiz or browse the full Economy previous-year-question bank with instant answers and explanations.
📈 Economy PYQs →