WBCS.LIVE practice question

What does the term 'Fiscal Deficit' indicate in the Indian budget?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. The total foreign debt of the government.
  2. The difference between exports and imports.
  3. The amount of money printed by the RBI.
  4. The total borrowing requirements of the government.

Correct answer and explanation

Correct answer: The total borrowing requirements of the government.

Explanation: āœ… Correct Answer: D) The total borrowing requirements of the government. šŸ“š Explanation: In government budgeting, a fiscal deficit occurs when the total overall expenditure formally exceeds the total revenue generated (excluding money from borrowings). Essentially, it represents the exact total borrowing requirements of the government needed to completely bridge this financial gap. A high fiscal deficit often leads to inflation and increased national debt.