Which of the following is the best indicator of the borrowings of the Government?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. Fiscal deficit.
Fiscal deficit is considered the best indicator of the borrowings of the government. It represents the gap between the government’s total expenditure and its total revenue (excluding borrowings). A fiscal deficit shows how much the government needs to borrow in a financial year to meet its expenditure requirements. It includes both revenue and capital expenditure, making it a comprehensive measure of the government's financial health.
Other Options:
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Revenue deficit: Difference between revenue expenditure and revenue receipts; does not directly indicate borrowings.
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Primary deficit: Fiscal deficit minus interest payments; shows borrowing excluding interest.
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Balance of payments deficit: Related to a country’s international financial transactions, not directly government borrowings.