If government in a fiscal year has its revenue receipts less than the expenditure, such country is having

Analyze the question: The question describes a situation where government revenue is less than government expenditure in a fiscal year. We need the budget term for this.

Explain the concept: A government budget is a statement of expected revenue and planned expenditure for a fiscal year. There are three main types:

| Situation | Type of Budget | |---|---| | Revenue = Expenditure | Balanced budget | | Revenue > Expenditure | Surplus budget | | Revenue < Expenditure | Deficit budget |

Step-by-step solution:

1. Revenue receipts are less than expenditure, so Revenue < Expenditure.
2. The government is spending more than it earns.
3. The gap (Expenditure − Revenue) must be financed by borrowing (internal or external), printing money, or drawing on reserves.
4. This situation is called a deficit budget.

Checking the other options:

• B. Favorable budget: this is not a standard budget classification.
• C. Balanced budget: this would require revenue to equal expenditure.
• D. Surplus budget: this would require revenue to exceed expenditure.

**Answer: A.

Exam tip: Think of a deficit as a "shortfall." If a student's pocket money is less than what they spend, they are in deficit. Deficit means revenue is lower, surplus means revenue is higher, and balanced means they are equal.