In estimating the budgetary deficit, the official approach in India is to exclude Options: A . &nbspborrowings from the Reserve Bank of India B . &nbsplong term borrowing from the market C . &nbspdrawing down of the cash balance D . &nbspborrowing from Reserve Bank in the form of ways and means advance

In estimating the budgetary deficit, the official approach in India is to exclud

Question

In estimating the budgetary deficit, the official approach in India is to exclude

Options:

A . borrowings from the Reserve Bank of India

B . long term borrowing from the market

C . drawing down of the cash balance

D . borrowing from Reserve Bank in the form of ways and means advance

Answer: Option C
Answer: (c)
When the government expenditure exceeds revenues, the government is having a budget deficit. Thus the budget deficit is the excess of government expenditures over government receipts (income).
When the government is running a deficit, it is spending more than its receipts. Budgetary Deficit is the difference between all receipts and expenditures of the government, both revenue and capital.
This difference is met by the net addition of the treasury bills issued by the RBI and the drawing down of cash balances kept with the RBI. So when it is estimated, drawing down of cash balances is excluded.

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