One kind of deficit in the annual Budget will have to be financed through borrowings. It indicates the total borrowing requirements of the government from all sources. It is known as :
Answer & explanation
Correct answer: option 2
The fiscal deficit will have to be financed through borrowing. Thus, it indicates the total borrowing requirements of the government from all sources. From the financing sid:
Gross fiscal deficit = Net borrowing at home + Borrowing from RBI + Borrowing from abroad