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Question

Q. Consider the following statements in reference to Effective revenue deficit:

Which of the statements given above is/are correct?


A
1 only
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B
2 only
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C
Both 1 and 2
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D
Neither 1 nor 2
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Solution

The correct option is A 1 only

Explanation:

  • Statement 1 is correct. It is an additional fiscal indicator that has been prescribed by an amendment to the FRBM Act by the Finance Act, 2012. Effective revenue deficit has been defined as the difference between “the revenue deficit and the grants for creation of capital assets”.
  • Statement 2 is incorrect. Grants for creation of capital assets are defined as “the grants-in-aid given by the Central Government to the State Governments, constitutional authorities or bodies, autonomous bodies and other scheme implementing agencies for creation of capital assets.

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