Which of the following is true?
A) Fiscal deficit is financed from borrowings.
B) Recovery of loans is a revenue receipt.
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. Only A.
A) Fiscal deficit is financed from borrowings is true. A fiscal deficit occurs when a government's total expenditures exceed its total revenue, excluding borrowing. To cover this deficit, governments typically resort to borrowing from various sources, including domestic and international lenders.
B) Recovery of loans is a revenue receipt is false. Recovery of loans is classified as a capital receipt, not a revenue receipt. Revenue receipts are income sources such as taxes and grants, while capital receipts include loans and asset sales.