alleryStart learning →The fiscal deficit is significant chiefly because it indicates the government's
Ashare of public goods
Btotal borrowing requirement
Ctotal tax collection target
Dannual subsidy outgo
Answer & Solution
Correct answer: B. total borrowing requirement
1. Fiscal deficit is the gap that must be financed.
2. Financing comes from borrowing at home, from the RBI, and from abroad.
3. So the figure states the government's **total borrowing requirement** from all sources.
4. It is therefore a key indicator of the financial health of the public sector.
_Source: syllabus Introductory Macroeconomics, Ch 5 "Government Budget and the Economy", section 5.2.1 Measures of Government Deficit_
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