BANKING AFFAIRS

Detailed explanation-1: -From 1950-51 up to 1997, there were only two deficits taken into account i.e. Revenue and budgetary Deficits. Hence statement A is correct. The Sukhmoy Chakravarty Committee recommended the introduction of the FIscal deficit.

Detailed explanation-2: -In India the concept of fiscal deficit was first introduced in 1991 and was defined as the sum of revenue deficit, capital expenditure less recovery of loans and other receipts.

Detailed explanation-3: -The Gross fiscal deficit (GFD) of states is budgeted to narrow to 3.4 per cent of gross domestic product (GDP) in 2022-23 from 4.1 per cent in 2020-21, helped by broad-based economic recovery and higher revenue collections, as per a Reserve Bank of India’s (RBI) report released on Monday.

Detailed explanation-4: -At the central level this framework was initiated in 2003 when the Parliament passed the Fiscal Responsibility and Budget Management Act (FRBMA). Taxes are the main source of government revenues.

Detailed explanation-5: -A fiscal deficit is a difference between a government’s total revenue and expenses in a given fiscal year. It indicates the extent to which a government relies on borrowing to finance its spending. A fiscal deficit can be funded by issuing government bonds, increasing taxes, or running down foreign exchange reserves.