India's first budget was announced in Pre-India, i.e. on April 7, 1860, when Scottish economist and politician Jawar Wilson of East India company presented it to the British Crown. However India's first Budget after independence was presented on November 26, 1947 by the finance Minister R.K. Shaumu Khan Chetty. It is also true that the first Prime Minister who has presented the Budget due to the resignation of finance Minister, is Mr. J.L Nehru. The Budget of all economy is considered as vision for nearest future as it is an annual financial statement showing otherwise estimates of expected revenue and expenditure of the Government  during a financial year. In the beginning of the year, the government presented before the Lok Saba by stating its estimated receipts and expenditure. The Budget impacts the economy and society at three level (I) it promotes the aggregate fiscal discipline through controlled expenditure (II) Allocation of resources on the basis of social priorities and also (III) effective and efficient programmes for delivery of goods services to achieve maximum utility among the society. Due to economic showdown in Post-Covid environment, it is very difficult for the government to control its fiscal deficit or the expenditure are high and the present Government has targeted its financial deficit upto 16.61 Lakh crore i.e. 6.4% GDP of India for the fiscal year ended 31st March, 2023. The  budget of a economy generally consists of Annual Financial Statements and demand for grants. The high fiscal deficit may cause economic failure for an economy. Therefore government tries to minimise its fiscal deficit.

In case of deficit budget, the fiscal deficit of an economy in equal to ______________.

Borrowing

The correct answer is option (1) : Borrowing

Fiscal deficit: Fiscal deficit is the difference between the government’s total expenditure and its total receipts excluding borrowin.

Gross fiscal deficit = Total expenditure – (Revenue receipts + Non-debt creating capital receipts)

The fiscal deficit will have to be financed through borrowing. Thus, it indicates the total borrowing requirements of the government from all sources.