Which of the following concepts of Budget deficit has become practically redundant in India?a)Fiscal deficitb)Budgetary deficitc)Primary deficitd)Revenue deficitCorrect answer is option 'B'. Can you explain this answer?

Question

Answer

Explanation:

Budgetary Deficit:
- Budgetary deficit refers to the excess of total budget expenditure over total budget receipts.
- It was the most commonly used concept of budget deficit in India in the past.

Changes in Terminology:
- Over time, the concept of budgetary deficit has become practically redundant in India.
- This is due to the introduction and emphasis on more nuanced concepts like fiscal deficit, revenue deficit, and primary deficit.

Fiscal Deficit:
- Fiscal deficit is the difference between the government's total expenditure and total revenue (excluding borrowing).
- It is considered a more comprehensive measure of the government's financial health compared to budgetary deficit.

Primary Deficit:
- Primary deficit is the fiscal deficit minus interest payments on past borrowing.
- It is a key indicator of the government's ability to meet its current expenditure without resorting to further borrowing.

Revenue Deficit:
- Revenue deficit is the excess of revenue expenditure over revenue receipts.
- It indicates the extent to which the government is dependent on borrowings to meet its day-to-day expenses.

Conclusion:
- While budgetary deficit was commonly used in the past, it has become less relevant in the current fiscal landscape of India.
- Concepts like fiscal deficit, primary deficit, and revenue deficit provide a more detailed and accurate picture of the government's financial position.

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