alleryStart learning →From the financing side, gross fiscal deficit is the sum of borrowing at home, borrowing from abroad and borrowing from
Athe municipal bodies
Bthe cooperative banks
Cthe Reserve Bank of India
Dthe state governments
Answer & Solution
Correct answer: C. the Reserve Bank of India
1. A deficit must be financed from somewhere.
2. The three sources are net borrowing at home, borrowing from abroad, and borrowing from **the RBI**.
3. Net borrowing at home covers the public through small savings schemes and commercial banks indirectly via the SLR.
4. State governments are not a financing source for the Union fiscal deficit.
_Source: syllabus Introductory Macroeconomics, Ch 5 "Government Budget and the Economy", section 5.2.1 Measures of Government Deficit_
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