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Question

Revenue deficit can be managed through borrowing or disinvestment. But fiscal deficit can be managed only through borrowing. Do you agree? State reason(s) in support of your answer.


Solution

The statement is true because disinvestment is already included as an item of capital receipt in the estimation of the fiscal deficit. So, borrowing is the only window available to manage fiscal deficit. On the other hand, estimation of revenue deficit does not account for borrowings as well as disinvestment. So, both these windows are available to manage revenue deficit.

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