The term “off budget borrowing” is often seen in news in relation to presentation of government budgets. Which of the following statements regarding off budget borrowings is incorrect?a)It is excluded from fiscal deficit calculations.b)The interest payments on such borrowings are made from the Consolidated Fund of India.c)These are borrowings directly taken by the Government of India.d)These are raised from market by issuing Government of India fully serviceable bonds.Correct answer is option 'C'. Can you explain this answer?

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The term “off budget borrowing” is often seen in news in relation to presentation of government budgets. Which of the following statements regarding off budget borrowings is incorrect?

a)
It is excluded from fiscal deficit calculations.
b)
The interest payments on such borrowings are made from the Consolidated Fund of India.
c)
These are borrowings directly taken by the Government of India.
d)
These are raised from market by issuing Government of India fully serviceable bonds.

Correct answer is option 'C'. Can you explain this answer?

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The term “off budget borrowing” is often seen in news in relation to ...

Statement a is correct: Extra budget borrowing is excluded from the fiscal deficit calculations, but at the same time, are added to the total debt of the government.
Statement b is correct: Though such borrowings are not a part of the consolidated fund of India, the interest payment for such borrowings is made from the consolidated fund.
Statement c is incorrect: According to the budget document, Off the Budget Borrowings or Extra budgetary resources (EBRs) are those financial liabilities that are raised by Public Sector Undertakings (i.e., government owned entities) for which repayment of entire principal and interest is done from Government budget. It is not taken in the name of the Government of India. Statement d is correct: In recent years, several CPSUs have raised resources from the market by issuing Government of India-Fully Serviced Bonds (GoIFSB) for which the repayment of both principal and interest is to be done from the Budget.

Knowledge Base:

Several budgets announced schemes are financed out of extra budget borrowings. These

Borrowings are done by the public sector entities that are administering the schemes. In the past, schemes like the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), Deen Dayal Upadhayay Gram Jyoti Yojana (DDUGJY), Swachh Bharat Mission (SBM), Pradhan Mantri Awas Yojana (PMAY), etc were financed out of extra budget borrowings.

The Comptroller and Auditor General of India has raised concern about rising off budget borrowings. The Fifteenth Finance Commission in its initial report advised both the centre and the states to eliminate extra budget borrowings.

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The term “off budget borrowing” is often seen in news in relation to presentation of government budgets. Which of the following statements regarding off budget borrowings is incorrect?a)It is excluded from fiscal deficit calculations.b)The interest payments on such borrowings are made from the Consolidated Fund of India.c)These are borrowings directly taken by the Government of India.d)These are raised from market by issuing Government of India fully serviceable bonds.Correct answer is option 'C'. Can you explain this answer?

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