Which of the below mentioned elements is NOT a way to finance the government deficits?

Correct option is C

The correct answer is (c) Higher taxation
· Higher taxation is a way to reduce the deficit, not finance it.
· Government finances deficits through borrowings, non-tax revenues, and deficit financing.
· Taxation generates revenue, but it's not considered a financing mechanism for deficit.
· Financing involves raising funds to cover shortfall in expenditure vs revenue.
· Fiscal deficit is met by methods like issuing government bonds.
· Deficit financing includes borrowing from RBI or printing money.
Information Booster:
• Fiscal deficit = Total expenditure – Total receipts (excluding borrowings).
• Managed through budgetary tools and FRBM Act targets.
• Non-tax revenue includes dividends, profits, and interest receipts.
• Market borrowings are a major source.
• Government also borrows from international institutions.
• Too much borrowing leads to debt burden and inflation.
Additional Information:
• Borrowings – Key way to finance fiscal gap.
• Non-tax revenues – Earnings from PSUs, fees, etc.
• Deficit financing – Printing currency or borrowing from RBI.
• Higher taxation – Revenue-raising, but not deficit financing tool.