Multiple choice

The largest source of financing the public sector outlay of the Eighth Five year Plan comes from

  1. balance from the current revenue

  2. contribution of the public enterprises

  3. the government borrowings

  4. the deficit financing
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under deficit financing, the government spends more money than it collects as revenue, the difference being made up by borrowing from the Reserve Bank of India by issue of promissory notes.

Keep practicing — related questions