Consider the following statements:
1. The central government describes fiscal deficit of India as “the excess of total disbursements from the Consolidated Fund of India, including repayment of the debt, over total receipts into the Fund (including the debt receipts) during a financial year”.
2. A recurring high fiscal deficit means that the government has been spending beyond its means.
Which of the statements given above is/are correct?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
• Fiscal deficit is the difference between the total income of the government (total taxes and non-debt capital receipts) and its total expenditure.
• A fiscal deficit situation occurs when the government’s expenditure exceeds its income. This difference is calculated both in absolute terms and also as a percentage of the Gross Domestic Product (GDP) of the country. A recurring high fiscal deficit means that the government has been spending beyond its means.
• The government describes fiscal deficit of India as “the excess of total disbursements from the Consolidated Fund of India, excluding repayment of the debt, over total receipts into the Fund (excluding the debt receipts) during a financial year”.
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