The largest source of financing the public sector outlay of the Eighth Five-Year Plan comes from

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Q: 94 (IAS/1995)
The largest source of financing the public sector outlay of the Eighth Five-Year Plan comes from

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,79,219,33,56,130,79

keywords: 

{'public sector outlay': [0, 1, 0, 0], 'government borrowings': [0, 1, 0, 0], 'public enterprises': [0, 0, 0, 1], 'deficit financing': [0, 0, 0, 3], 'year plan': [0, 0, 1, 8], 'current revenue': [0, 2, 0, 0], 'largest source': [0, 1, 2, 2], 'eighth': [0, 4, 1, 1]}

The question is asking about the primary methods of funding for India`s Eighth Five-Year Plan.

Option 1: Balance from current revenue suggests that surplus from the previous financial year`s budget was used to fund the plan. However, usually current government revenue isn`t sufficient to cover the costs of a five-year plan.

Option 2: Contribution of public enterprises implies that the funding was sourced from profits made by state-owned entities. While these entities contribute, they are typically not the largest source of funding.

Option 3: Government borrowing suggests that the government took loans from domestic or international sources to finance the plan. This can form a substantial part of the funding, but it is not the primary source.

Option 4: Deficit financing is the correct answer as it is often the primary method of funding substantial projects such as a five-year plan. Deficit financing involves the government spending more than it earns, creating a deficit. This deficit is usually covered by borrowing from the central bank, thereby increasing the money supply, which is a form of funding. It was the largest source of financing the public sector outlay of the Eighth Five-Year Plan for India.

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