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DEFICITS - Economics, UPSC, IAS. Notes | Study Indian Economy (Prelims) by Shahid Ali - UPSC

Document Description: DEFICITS - Economics, UPSC, IAS. for UPSC 2022 is part of Indian Economy (Prelims) by Shahid Ali preparation. The notes and questions for DEFICITS - Economics, UPSC, IAS. have been prepared according to the UPSC exam syllabus. Information about DEFICITS - Economics, UPSC, IAS. covers topics like and DEFICITS - Economics, UPSC, IAS. Example, for UPSC 2022 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for DEFICITS - Economics, UPSC, IAS..

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DEFICITS

EficitsDEFICITS

Types Deficits

  • Revenue deficit
  • Fiscal deficit
  • Primary deficit
  • Monetized deficit

Deficits,Economics,UPSC,IAS,Test Preparation

Revenue Deficit

  • When Revenue Expenditure exceeds revenue Receipts
  • Fiscal deficit
  • When total expenditure (Revenue + Capital) exceeds total receipts (Revenue + Capital).

Primary deficit

  • Fiscal deficit – interest payments

Monetized deficit

  • It is a part of fiscal deficit provided by the RBI

Deficit financing

  • The act f supporting a deficit budget by a government
  • First used in USA in 1930s
  • India tried it in 1969

Means of deficit financing

  • External borrowings
  • External aids and grants
  • Internal borrowings
  • Printing currency

Fiscal Responsibility Budget Management (FRBM) Act 2003

Main Highlights:

  1. To reduce Fiscal & Revenue deficit so as to eliminate revenue deficit by 31st March 2008
  2. Annual targets 9 Revenue deficit by 0.5 % per annum and Fiscal deficit by 0.3% p.a
  3. Fiscal deficit and revenue deficit may exceed targets only on the grounds of National security, calamity etc
  4. GoI not to borrow from RBI except by Ways & Means Advances (WMAs)
  5. RBI not to subscribe to the primary issue of GoI securities from 2006-07
  6. To ensure greater transparency in fiscal operations
  7. Each year GoI to lay 3 statements in the parliament
    1. Fiscal policy strategy statement
    2. Medium term fiscal policy statement
    3. Macroeconomic framework statement
  8. Finance Minister to make quarterly review of trends in receipts & expenditure in relation to Budget
  9. In 2006-07, in case of the Central government, proposed reduction in revenue and Fiscal deficit were put at 0.6 % and 0.5% respectively (higher than the FRBMA Rules), though the reduction suffered in 2005-06 due to higher devolution to states by centre on account of the recommendations of 12th Finance Commission. Sates also showed considerable improvement. The fiscal deficit of the states declined by 1.6% post FRBMA from 4.5 % in 2003-04 to 2.6% in 2006-07 of their GDP
The document DEFICITS - Economics, UPSC, IAS. Notes | Study Indian Economy (Prelims) by Shahid Ali - UPSC is a part of the UPSC Course Indian Economy (Prelims) by Shahid Ali.
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