Read the following statements:
Statement I: Formally, a budget deficit is the excess of total expenditure (revenue and capital) over total receipts (revenue and capital).
Statement II: The central budget in India continues to show the budget deficit as a separate measure every year.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Statement I is true but Statement II is false.
Statement I: Formally, a budget deficit is the excess of total expenditure (revenue and capital) over total receipts (revenue and capital). — True. It compares all expenditure with all receipts, revenue and capital taken together.
Statement II: The central budget in India continues to show the budget deficit as a separate measure every year. — False. India stopped showing the budget deficit from the 1997-98 budget. The book uses other measures instead: the revenue, fiscal and primary deficits.
NCERT (2026-27): “5.2.1 Measures of Government Deficit When a government spends more than it collects by way of revenue, it incurs a budget deficit …” “More formally, it refers to the excess of total expenditure (both revenue and capital) over total receipts (both revenue and capital). From the 1997-98 budget, the practice of showing budget deficit has been discontinued in India.” “… There are various measures that capture government deficit and they have their own implications for the economy.” |