Fiscal Deficit vs Budgetary Deficit — UPSC Prelims PYQ 1999

Consider the following statements:

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

Options:

1. Both A and R are true, and R is the correct explanation of A
2. Both A and R are true, but R is not a correct explanation of A
3. A is true, but R is false
4. A is false, but R is true

Explanation

Option (a) is correct

• Budgetary deficit refers only to the gap between total receipts and total expenditure of the government. Fiscal deficit is a broader concept and represents the total borrowing requirements of the government, including borrowings from the Reserve Bank of India and other liabilities. Hence, fiscal deficit is generally greater than budgetary deficit, and the Reason correctly explains the Assertion.

Answer: (a) Both A and R are true, and R is the correct explanation of A