In percentage terms, the Centre's fiscal deficit at the end of February stood at 82.7 per cent of the full year budget target, mainly on account of higher expenditure. In the last financial year, the fiscal gap between the expenditure and revenue was 76 per cent of the Revised Estimate of 2020-21. In actual terms, as per the data released by the Controller General of Accounts, the deficit stood at Rs 13.16 trillion at the end of February. The total receipts of central government were 83.9 percent of the Revised Estimate of Budget 2021-22. or Rs 18.27 trillion in absolute terms. It was 88.2 per cent of the Revised Estimate of 2020-21 in the corresponding period last financial year. The government's total expenditure was at Rs 31.43 trillion or 83.4 per cent of the current year's RE. It was 81.7 per cent of Revised Estimate in the corresponding period last financial year.

Budgetary deficits is NOT financed by which of the following methods?

None of the above

The correct answer is option 4: None of the above

Budgetary deficits can be financed through taxation, borrowing or printing more money. Governments have mostly relied on borrowing, giving rise to what is called government debt.

Budgetary deficits can be financed through the following methods:

1. Taxation: Increasing taxes can help reduce the deficit by boosting government revenue. However, this method alone may not be sufficient to fully cover a deficit, especially if the deficit is large.

2. Borrowing: Governments can borrow money from domestic or international sources to cover budgetary deficits. This can be done through issuing government bonds or taking loans from financial institutions or other countries.

3. Printing of Notes: The central bank can print additional currency to cover a deficit. This method can lead to inflation if overused, as increasing the money supply without a corresponding increase in goods and services can devalue the currency.