| 1. Fiscal deficit = Budget deficit – Government’s market borrowing and liabilities |
| 2. Fiscal deficit = Budget deficit + Government's market borrowing and liabilities |
| 3. Fiscal deficit = Revenue expenditure - Budget receipts |
| 4. Fiscal deficit = Revenue expenditure + Budget receipts |
A) 1 only
B) 2 only
C) 3 only
D) None of the above
Correct Answer: B
Solution :
Fiscal deficit is budget deficit plus borrowings and other liabilities. Fiscal deficit = Budget deficit + Government?s market borrowing and liabilities. The fiscal deficit situation shows whether the government is spending beyond its income. India has, unfortunately, been a country prone to constant and high fiscal deficit situations. A high fiscal deficit implies high indebtedness of the government and a deficit above 3% in the Indian context means an alarming situation for the government finances
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