UPSC CSE Prelims
Question 76
In India, deficit financing is used for raising resources for
View correct answer and explanation
Correct answer: A
Correct Option: A
Explanation: Deficit financing mobilises additional resources for government spending, including capital formation and planned economic development.
Option-wise Analysis:
A: Correct - Correct: it can finance public investment and development expenditures when ordinary revenue is insufficient.
B: Incorrect - Wrong: redeeming old public debt is not the usual development objective of deficit financing.
C: Incorrect - Wrong: a balance-of-payments imbalance requires external-account measures, not merely domestic deficit financing.
D: Incorrect - Wrong: paying down foreign debt is not its principal use.