Question

Which of the following is a measure of fiscal reforms Government of India has adopted?

• A. Bringing down fiscal deficit to a particular level by an Act of Law
• B. Fixing higher rate of growth
• C. Allocation of more funds to job-oriented schemes
• D. Allocation of more funds to provide education to children who are 6-14 years of age

Answer 1

The correct option is A Bringing down fiscal deficit to a particular level by an Act of Law

Fiscal Deficit is a termed used to refer to the difference between the government's total revenue and total expenditure in a financial year. Since the government borrows from the market to bridge this gap, this also indicates the total borrowings needed by the government in a particular year. While a nominal fiscal deficit is considered normal for a developing economy, it becomes a worry when it shoots up beyond a threshold, which depends on different interpretations. One of the major problems with fiscal deficit is that the larger it is, the larger the market borrowing the government of the day resorts to, thereby crowding out private investment.