Macro

Government Budget

Medium

Which of the following can help to reduce the Fiscal Deficit?

Increasing Subsidies.

Increasing proceeds from the sale of PSUs.

Investing in improving public goods.

Decreasing the burden and incidence of tax.

✅ Correct Option: 2

Option 1 -> Increasing subsidies raises government expenditure, thereby increasing fiscal deficit.

Option 2 -> Increasing proceeds from sale of PSUs generates non-tax revenue through disinvestment, helping reduce fiscal deficit.

Option 3 -> Investing in public goods increases government expenditure, thereby increasing fiscal deficit.

Option 4 -> Decreasing tax burden reduces government revenue, thereby increasing fiscal deficit.

Hence, Option 2: Increasing proceeds from the sale of PSUs -> Fiscal Deficit = Total Expenditure - Total Revenue (excluding borrowings). To reduce fiscal deficit, the government must either increase revenue or decrease expenditure. Disinvestment through sale of Public Sector Undertakings (PSUs) generates non-tax revenue (capital receipts), which increases total government revenue without raising expenditure. This directly helps in bridging the gap between expenditure and revenue, thus reducing the fiscal deficit. -> correct

2022: 19 July Shift 2

Match List - I with List - II.

List - I (Transactions)	List - II (Heads)
(A) Loans extended by the Indian Government to the Sri Lankan Government	(I) Revenue Receipts
(B) Expenditure by the Government on Covid Vaccines	(II) Capital Receipts
(C) Dividend received by the Government on shares bought by it	(III) Capital Expenditure
(D) Public Provident Fund held by Public	(IV) Revenue Expenditure

Choose the correct answer from the options given below :

2025: 30 May Shift 1

Identify which of the following is an example of non-debt capital receipts.

2022: 30 Aug Shift 2

Which of the following statements is true ?

(A) Fiscal deficit is the difference between the government's budgetary expenditure and budgetary receipts excluding borrowings.

(B) Primary deficit is the difference between total receipts and interest payments.

(D) Primary deficit equals revenue deficit less interest payments.

(E) Revenue deficit refers to excess of government's revenue expenditure over its revenue receipts.

Choose the correct answer from the options given below :

2022: 10 Aug Shift 2

Identify direct taxes from the following :

(A) Goods and Services Tax

(B) Corporate Tax

(D) Value Added Tax

Choose the correct answer from the options given below :

2025: 16 May Shift 1

Due to recessionary pressure in an economy, suppose the government plans a deficit budget for a given financial year.

Identify the correct sequence in which this will affect the economy.

(A) Taxes will be reduced, and public spending will increase.

(B) GDP will start rising.

(D) The purchasing power of the people will increase.

Choose the correct answer from the options given below:

2026: 11 May Shift 2

Identify Capital Receipt from the following:

Which of the following can help to reduce the Fiscal Deficit?

Solution

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