In the Union Budget 2025–26, the fiscal deficit target

Q: Answer-In the Union Budget 2025–26, the fiscal deficit target for FY26 is set at 4.4% of GDP. From a fiscal...

A reduction in fiscal deficit from 4.8 FY25 RE to 4.4 indicates fiscal consolidation, which is a contractionary stance aimed at stabilizing debt and reducing borrowing.

for FY26 is set at 4.4% of GDP. From a fiscal policy standpoint, this target primarily reflects—

A Expansionary fiscal policy Correct Answer Incorrect Answer

B Neutral fiscal policy Correct Answer Incorrect Answer

C Contractionary fiscal policy Correct Answer Incorrect Answer

D Discretionary monetary tightening Correct Answer Incorrect Answer

E Counter-cyclical taxation Correct Answer Incorrect Answer

Solution

A reduction in fiscal deficit from 4.8% (FY25 RE) to 4.4% indicates fiscal consolidation, which is a contractionary stance aimed at stabilizing debt and reducing borrowing.

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