2013 GS Paper I, all questions
UPSC Prelims 2013 · GS Paper I
Question 44: Economy and Social Development
In India, deficit financing is used for raising resources for
aeconomic development
bredemption of public debt
cadjusting the balance of payments
dreducing the foreign debt
AnswerUPSC’s answer is (a).
Deficit financing means meeting a budget deficit by borrowing from the central bank or by creating new money. In India the Five-Year Plans used it to finance public investment for economic development when taxes and savings fell short. It is not meant to repay public debt, correct the balance of payments or reduce foreign debt.
Why each option is right or wrong
- (a) Correct. It is used to raise resources for development spending.
- (b) Wrong. Repayment of public debt is not its purpose.
- (c) Wrong. Balance-of-payments adjustment is done by other policies.
- (d) Wrong. It is not used to reduce foreign debt.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2013, General Studies Paper I, Series A. The paper on upsc.gov.in.