Consider the following statements.A) Since 1950-51, the government of

1.	Consider the following statements.A) Since 1950-51, the government of India recognised only two types of deficits viz. Revenue and overall budgetary deficit.B) Fiscal deficit was introduced in the year 1997-98 based on the recommendation of the Narasimham committeeWhich of the above statements is /are not correct?1. Both A and B2. A only3. B only4. None of the aove
Answer» Correct Answer - Option 3 : B only The correct answer is B only. 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. Hence statement B is incorrect. The Sukhmoy Chakravarthy Committee recommended giving up the conventional concept of deficit financing and start the calculation of fiscal deficit in the year 1997-98. This committee to look into the working of the monetary system had pointed out an inherent weakness in budgetary deficit as a means of deficit financing. The committee emphasized that real deficit should include not only budgetary deficit but also market borrowings and other liabilities. The government accepted this recommendation and started calculation of the third type of deficit, known as fiscal deficit from 1997-98.

Consider the following statements.A) Since 1950-51, the government of India recognised only two types of deficits viz. Revenue and overall budgetary deficit.B) Fiscal deficit was introduced in the year 1997-98 based on the recommendation of the Narasimham committeeWhich of the above statements is /are not correct?1. Both A and B2. A only3. B only4. None of the aove

Answer» Correct Answer - Option 3 : B only

The correct answer is B only.

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. Hence statement B is incorrect.

The Sukhmoy Chakravarthy Committee recommended giving up the conventional concept of deficit financing and start the calculation of fiscal deficit in the year 1997-98.
- This committee to look into the working of the monetary system had pointed out an inherent weakness in budgetary deficit as a means of deficit financing.
- The committee emphasized that real deficit should include not only budgetary deficit but also market borrowings and other liabilities.
- The government accepted this recommendation and started calculation of the third type of deficit, known as fiscal deficit from 1997-98.