Assertion (A) >: Fiscal deficit is greater than budgetary deficit. Reason (R) >: Fiscal deficit is the borrowings from the Reserve Bank of India plus other liabilities of the Government to meet its expenditure.

examrobotsa's picture

Submitted by examrobotsa on

Q: 100 (IAS/1999)

Assertion (A): Fiscal deficit is greater than budgetary deficit.
Reason (R): Fiscal deficit is the borrowings from the Reserve Bank of India plus other liabilities of the Government to meet its expenditure.

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,162,151,162,56,62,33

keywords: 

{'fiscal deficit': [0, 2, 2, 4], 'budgetary deficit': [1, 2, 0, 1], 'borrowings': [0, 2, 0, 3], 'expenditure': [2, 0, 2, 4], 'other liabilities': [0, 1, 0, 0], 'reserve bank': [1, 0, 3, 4], 'india': [8, 1, 7, 13], 'government': [5, 0, 0, 1]}

The correct answer is "Both A and R are true, and R is the correct explanation of A."

Assertion (A) states that fiscal deficit is greater than budgetary deficit. Fiscal deficit refers to the difference between the total expenditure and total receipts of the government, including borrowings, in a fiscal year. Budgetary deficit, on the other hand, refers to the difference between the government`s total expenditure and its revenue receipts, excluding borrowings.

Reason (R) explains that fiscal deficit is the borrowings from the Reserve Bank of India plus other liabilities of the Government to meet its expenditure. This means that fiscal deficit includes borrowings from the Reserve Bank of India and other sources to finance the government`s expenditure needs.

The reason provided (R) offers a correct explanation of why fiscal deficit is greater than budgetary deficit. Fiscal deficit includes not only the budgetary deficit but also additional borrowings and liabilities taken by the government to meet its expenditure requirements.

Therefore, both the assertion (A) and the reason (R) are true, and the reason correctly explains the assertion.