The Government: Budget and the Economy Test - 9

it is equal to the excess of total expenditure over the sum of revenue receipts  and capital receipts excluding borrowings. It actually reflects the total borrowings of the govt during the financial year.

Fiscal deficit reflects the total borrowings of the government during the financial year. Accumulated borrowings over the year reflect accumulated burden of national debt which is to be borne by the future generations.

Plan expenditure refers to that expenditure which relates to specific plans and programmes of development  whereas non plan expenditure refers to the expenditure which is not related to any specified plans and prgrammes.

Eg of planned expenditure - construction of flyover, hospital etc.

Eg. of non planned expenditure - Expenditure on defence, salaries, pensions etc.

Yes. Public expendiute can be both Plan and Non plan expenditure.  The expenditure relating to specific plans and programmes of developemnt is plan expenditure and non plan expenditure is not related to any specific plan or programme. Expenditure on defence and subsidies , salaries and pensions are example of non plan expenditure.

Public expenditure can be planned as well as non plan expenditure.  Plan expenditure refers to the expenditure which is directly related to the economic and social development of the country whereas non plan expenditure refers to the expenditure which is not directly related to the economic and social development of the country.

Public expenditure can also be planned expenditure which refers to the expenditure which relates to the specific plans and programmes of development by the government , like construction of hospital, construction of roads, flyovers etc.

Public expenditure can be developmental as well as non developmental expenditure.

Public expenditure can be development as well as non developmntal expenditure. Development expenditure refers to the expenditure which is directly related to the economic and social development of the country. whereas non developmental expenditure refers to the expenditure which is not directly related to economic and social developemnt of the country but related to essential general services of the government.

A budget can be a balanced budget, deficit budget or a surplus budget.

Fiscal deficit indicates the excess of government expenditure over receipts except borrowings. For eg. if total expenditure = Rs 100 crores and total receipts = Rs. 100 crores(including borrowing of Rs. 20 crores)

then fiscal deficit = 100 - (100 -20) = 20

so, we see that fiscal deficit = borrowings.