India posted a 9.2% GDP growth, the highest among all economies. The FM stated that ‘Sabka Prayaas’ will continue with strong growth. Budget 2022 has provided a sharp increase in public investment and capital expenditure provision. The strategic transfer of ownership of Air India has been completed. A new provision is introduced to allow taxpayers to update the past return and include omitted income by additional tax payment. The updated return can be filed within two years from the end of the relevant assessment year. Corporate surcharge to be reduced from 12% to 7%. An important amendment to the Central Goods and Services Tax Act is in Sections 16, 34, 37, 39, and 52. The last date to make amendments, corrections, upload missed sales invoices or notes, or claim any missed Input Tax Credit or ITC of one financial year is no longer the due date to file the September return of the following year, but it is the 30th November of the following year. A 6.4% fiscal deficit has been projected for India in FY23 and a revised fiscal deficit is estimated at 6.9% of GDP. Talking about education, two years of education regression for school-going children means we need to double-up efforts and spending to bridge education gaps. NEP had advocated a 6% of GDP to be directed towards education. While we remain far short, the announcement of tech-based platforms ‘One class, one TV channel’ program of PM eVIDYA for school children and the establishment of a digital university were the need of the hour. Also, RBI to introduce the digital rupee using blockchain technology starting 2022-23. For a country's overall development, its manufacturing sector plays a very important role as it absorbs the maximum labor of the country. To support sectors disproportionately affected by the pandemic, FM announces an extension of ECLGS till Mar-23. Given that nearly 95% of ECLGS borrowers are MSMEs, this measure will ensure the continued handholding of MSMEs and the services sector. The services sector, which accounts for more than 60% of India’s GDP, remains an important engine of economic growth, job creation, income generation, and livelihood support. Emergency Credit Line Guarantee Scheme has helped 130 lakh MSMEs mitigate the worst impact of the pandemic. An online bill system will also be launched to reduce the delay in payment which will be used by all the central ministries. 

Which of the following statement is true?

The borrowings by the government represent a situation of fiscal deficit

The correct answer is Option 3: The borrowings by the government represent a situation of fiscal deficit.

Option 1:This is incorrect. A revenue deficit occurs when the government's revenue expenditure (day-to-day running expenses) exceeds its revenue receipts (taxes and other income). Capital expenditure (investment in infrastructure) is a separate concept.

Option 2: This is incorrect. Borrowings by the government are not considered revenue expenditure. Revenue expenditure refers to the government's spending on its ongoing operations.

Option : This is correct. The excess of total expenditure over total revenue (excluding borrowings) is termed fiscal deficit. It represents the total borrowing requirements of the government. A higher fiscal deficit is the result of higher borrowings by the government as fiscal deficit is the difference between total expenditure and total receipt ( excluding borrowing).