BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Loans from financial institutions
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Loans from provident funds and reserve funds
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Loans from central government
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Market borrowings
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Detailed explanation-1: -There are two sources to finance the fiscal deficit. They are: Borrowings: internally from a commercial bank, or from external sources like the IMF, other governments, etc. Deficit financing (that is, printing new currency): borrowing funds from RBI against its securities (so, RBI prints new currency).
Detailed explanation-2: -Description: The gross fiscal deficit (GFD) is the excess of total expenditure including loans net of recovery over revenue receipts (including external grants) and non-debt capital receipts. The net fiscal deficit is the gross fiscal deficit less net lending of the Central government.
Detailed explanation-3: -In Union Budget 2023-24, the fiscal deficit to GDP is pegged at 5.9% in FY24. This ratio has declined from 6.4% in 2022-23 (revised estimate) and 6.7% in 2021-22 (actual). In the revenue budget, the deficit was 4.1% of GDP in 2022-23 (revised estimate). In Union Budget 2023-24, revenue deficit is 2.9% of GDP.