UPSC Prelims 2013 · Question 94 of 99
UPSC Prelims 2013 question on Deficit Financing Uses
- ExamUPSC CSE
- Year2013
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicPublic Finance
- DifficultyEasy
- TypeDirect
In India, deficit financing is used for raising resources for:
Show answer
Answer: A. Economic development
Analysis
Deficit financing refers to financing government expenditure through borrowing or by creating new money when expenditure exceeds revenue. In developing countries like India, it is mainly used to mobilize resources for economic development projects such as infrastructure, industry, and welfare schemes. Therefore, the primary objective of deficit financing is economic development.
Extra UPSC info
Excessive deficit financing can lead to inflationary pressures in the economy.