Political Science · Political Processes in India
UGC NET January 2017 Political Science
In India, the term deficit financing was first defined by
AFirst Five Year Plan ✓ Correct
BFinance Commission
CAdministrative Reforms Commission
DAD Gorwala Report
Correct answer: (A) First Five Year Plan — In India, the term deficit financing was first defined in the First Five Year Plan (1951 to 1956).
Explanation
★In India, the term deficit financing was first defined in the First Five Year Plan (1951 to 1956).
★Deficit financing means meeting the gap between government expenditure and revenue by creating new money or running down cash balances with the RBI.
★The First Plan adopted the Harrod-Domar growth model and used limited deficit financing to fund public investment.
★The Finance Commission (Article 280) only recommends tax-sharing and grants between the Union and States; it does not define deficit financing.
★The Administrative Reforms Commission dealt with administrative reform, and the A.D. Gorwala Report (1951) examined public administration and public enterprises.
★For NET, link the First Plan with Harrod-Domar and deficit financing, and the Second Plan with the Mahalanobis model.
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