1999 General Studies, all questions

UPSC Prelims 1999 · General Studies

Question 100: Economy and Social Development

Assertion (A): Fiscal deficit is greater than budgetary deficit. Reason (R): Fiscal deficit is the borrowings from the Reserve Bank of India plus other liabilities of the Government to meet its expenditure.

aBoth A and R are true, and R is the correct explanation of A
bBoth A and R are true, but R is not a correct explanation of A
cA is true, but R is false
dA is false, but R is true

AnswerThe answer is (a).

Fiscal deficit is the government's total borrowing need: expenditure minus revenue and non-debt receipts, met by borrowing and other liabilities. The budgetary deficit, as then defined, counted only the net credit from the RBI, so the fiscal deficit is larger. The given answer treats R as a correct explanation of A. Remember: fiscal deficit = budgetary deficit + market borrowings and other liabilities.

  • A. Fiscal deficit is greater than the budgetary deficit.
  • R. Taken as true: borrowing and other liabilities to meet expenditure make up the deficit, so it exceeds the RBI-credit measure.

How you could have got this

If you were sure statement 1 is correct, (d) goes. Then judge the second statement; if it is correct too, decide whether it explains the first.

This follows an unofficial answer: UPSC has not published its key for this year, and if that answer is wrong, so is this path.

Which options go is worked out from UPSC’s key and the options, not by a model.

Why each option is right or wrong
  • (a) Right as given. A is true and R is taken as its explanation.
  • (b) Wrong as given. R is taken as explaining A, not merely true.
  • (c) Wrong as given. R is incomplete rather than false.
  • (d) Wrong. A is true.

Worth knowing: R names only RBI borrowing and other liabilities and leaves out market borrowing, so some read R as false, which would make (c) the answer; the given answer takes R as the explanation.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 1999, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.