Which of the following expression shows the formula of Gross Fiscal Deficit ?

Question

Question

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Rajasthan RAS Prelims 2023 Official Paper

Gross Fiscal Deficit = Primary Deficit + Net borrowing from abroad
Gross Fiscal Deficit Total Expenditure-Revenue Receipts
Gross Fiscal Deficit = Revenue Deficit + Capital Expenditure
Gross Fiscal Deficit = Net borrowing at home + Borrowing Borrowing from abroad from RBI + Borrowing from abroad

Answer 1

The correct answer is option 4 .

Key Points

Gross Fiscal Deficit (GFD):
- The Gross Fiscal Deficit (GFD) is calculated as the total borrowings of the government, which include net borrowing at home, borrowing from the Reserve Bank of India (RBI), and borrowing from abroad.
- Hence, the formula is:
- Gross Fiscal Deficit=Net Borrowing at Home+Borrowing from RBI+Borrowing from Abroad.
Explanation:
- This formula shows that the fiscal deficit is financed by borrowing from different sources, including domestic markets (net borrowing at home), the central bank (RBI), and international sources (borrowing from abroad).
- The gross fiscal deficit represents the total financial gap that the government needs to fill through these borrowings.

Additional Information

Gross Fiscal Deficit (GFD):
- GFD measures the excess of total expenditure over total non-debt receipts, showing the reliance on borrowings to finance the government's budget.
Components of GFD:
- The key components of financing the GFD include borrowings from domestic markets, the central bank, and external sources.