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Q96 (IAS/2010) Economy › Government Finance & Budget › Fiscal deficit concepts Answer Verified

In the Context of governance, consider the following: 1. Encouraging Foreign Direct Investment inflows 2. Privatization of higher educational Institutions 3. Down-sizing of bureaucracy 4. Selling/offloading the shares of Public Sector Undertakings Which of the above can be used as measures to control the fiscal deficit in India?

Result
Your answer: —  Â·  Correct: D
Explanation
Fiscal deficit is the gap between total expenditure and non-debt receipts. Down-sizing bureaucracy (3) reduces revenue expenditure (salaries/pensions). Selling PSU shares (4) provides capital receipts through disinvestment. Both directly reduce the deficit. FDI (1) is a private capital inflow and does not impact the government's budget directly. While privatization of education (2) might reduce future subsidies, it is not a standard tool for fiscal deficit management compared to 3 and 4. According to the official UPSC 2010 key, the correct answer is D (3 and 4 only).
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