Discussion
A large part of fiscal deficit in India is financed by:
Answer: B
India's fiscal deficit is financed mainly by borrowing from the market, that is by the sale of government securities (dated securities and treasury bills) to banks, insurance companies and other investors, with smaller amounts raised through small savings, provident funds and external debt. External debt is a small part of the financing, so it is not the large part. The key gives market borrowings, option B. Small savings, state provident funds and external debt are real sources of financing too, but each is a much smaller share than the sale of government securities.
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