________ is defined as excess of total expenditure over total receipts excluding borrowings during a fiscal year.

Question

Question

This question was previously asked in

SSC CHSL Exam 2024 Tier-I Official Paper (Held On: 04 Jul, 2024 Shift 3)

Answer 1

The correct answer is Fiscal deficit.

Key Points

Fiscal Deficit is the difference between a government's total expenditure and its total revenue, excluding any borrowing, within a specific fiscal year.
Formula
- Fiscal Deficit=Total Expenditure−(Total Revenue+Non-Debt Receipts)
Impact on the Economy:
- Inflation: Persistent fiscal deficits can lead to higher inflation if funded by printing more money.
- Interest Rates: Higher fiscal deficits can lead to increased borrowing costs as the government competes for funds in the financial markets.
- Public Debt: A high fiscal deficit adds to the government’s debt burden, potentially leading to higher interest payments in the future.
Policy Measures
- Increase Revenue: Through higher taxes or better tax compliance.
- Reduce Expenditure: By cutting down on non-essential spending.
- Borrow Responsibly: Managing debt to ensure it does not become unsustainable.

Additional Information

Type of Deficit	Definition
Income Deficit	The shortfall between total government revenue and total government expenditure.
Structural Deficit	The part of the fiscal deficit that arises from structural imbalances in the economy and budgetary policies.
Gross Primary Deficit	The fiscal deficit before accounting for interest payments on previous borrowings.