Question map
Not attempted Correct Incorrect ★ Bookmarked
Loading…
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: B
Explanation

Privatisation and disinvestment are explicit fiscal consolidation tools because they raise non-debt capital receipts and improve stable capital inflows, directly helping reduce the fiscal deficit and government borrowing [1]. Proceeds from sale/offloading of PSU shares are treated as non-debt creating capital receipts and can be used to cover revenue shortfalls or reduce borrowing needs [2]. Downsizing bureaucracy reduces recurring revenue expenditure, thereby lowering the government’s fiscal outgo and easing the deficit burden. FDI inflows, while beneficial for growth and the tax base, do not directly provide non-debt receipts to the government in the same immediate way and thus are not a primary fiscal-deficit control instrument here. Hence 2, 3 and 4 are correct.

Sources

  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > FISCAL CONSOLIDATION > p. 114
  2. [2] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > 5.2.1 Measures of Government Deficit > p. 72
How others answered
Each bar shows the % of students who chose that option. Green bar = correct answer, blue outline = your choice.
Community Performance
Out of everyone who attempted this question.
57%
got it right
✓ Thank you! We'll review this.

SIMILAR QUESTIONS

CDS-I · 2022 · Q59 Relevance score: -1.77

Which one of the following would be considered as Foreign Direct Investment ?

IAS · 2011 · Q45 Relevance score: -2.44

With reference to the Finance Commission of India, which of the following statements is correct?

IAS · 2021 · Q37 Relevance score: -2.64

Consider the following: 1. Foreign currency convertible bonds 2. Foreign institutional investment with certain conditions 3. Global depository receipts 4. Non-resident external deposits Which of the above can be included in Foreign Direct Investments?

IAS · 2003 · Q96 Relevance score: -3.68

Consider the following statements: 1. The maximum limit of shareholding of Indian promoters in private sector banks in India is 49 per cent of the paid up capital. 2. Foreign Direct Investment up to 49 per cent from all sources is permitted in private sector banks in India under the automatic route. Which to these statements is/are correct?

IAS · 2020 · Q41 Relevance score: -3.71

With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic ?