When government expenditure on the current account exceeds government revenue on the current account, this situation is described as which type of budgeting?

Introduction / Context:
Public budgeting terminology is a regular feature of Indian economy and public finance questions. Governments often compare their expenditure and revenue on the current account to determine whether they are running a deficit or surplus. When spending exceeds revenue, the government must borrow or draw down reserves to cover the gap. This situation is given a specific name, and recognising it helps students understand fiscal policy and budget documents.

Given Data / Assumptions:
- Government expenditure on the current account is greater than government revenue on the current account.
- We need to identify what kind of budgeting this situation represents.
- Options include deficit budgeting, zero based budgeting, performance based budgeting and surplus budgeting.
- We assume standard definitions used in public finance.

Concept / Approach:
When expenditure exceeds revenue in a budget, the result is a deficit that must be financed by borrowing or other means. A budget that plans or results in such a gap is commonly called a deficit budget or deficit budgeting. Surplus budgeting is the opposite case where revenue exceeds expenditure. Zero based budgeting and performance based budgeting refer to methods of preparing the budget, not to the balance between expenditure and revenue. Therefore, we must pick the term that directly describes a situation of excess expenditure over revenue.

Step-by-Step Solution:
Step 1: Focus on the core information: government expenditure on current account is greater than government revenue on current account. Step 2: This means the government has to cover the difference by borrowing or using past savings; this gap is called a budget deficit. Step 3: A budget in which such a deficit exists is known as a deficit budget, and the practice is termed deficit budgeting. Step 4: Compare with other terms. Zero based budgeting is a technique where every expense must be justified from zero each year, not a statement about surplus or deficit. Step 5: Performance based budgeting links allocations to performance indicators and outcomes, again not directly describing a deficit or surplus situation. Step 6: Surplus budgeting requires revenue to be greater than expenditure, which is the opposite of what is given. Step 7: Therefore, the correct term is deficit budgeting.

Verification / Alternative check:
Budget documents commonly classify the situation where expenditure exceeds revenue as involving a revenue deficit, fiscal deficit or primary deficit, depending on which components are considered. All of these involve deficit budgeting because the government must raise funds from borrowing or asset sales. This aligns perfectly with the plain language meaning of the term deficit budgeting, confirming that it is the appropriate label among the options given.

Why Other Options Are Wrong:
Zero based budgeting is wrong because it describes a method of budgeting where each item starts from a base of zero and must be justified afresh, regardless of past allocations. It does not imply anything directly about a deficit or surplus.
Performance based budgeting is wrong because it refers to linking expenditure to performance metrics and outcomes, not to the balance between revenue and expenditure.
Surplus budgeting is wrong because it indicates that government revenue exceeds expenditure, which is the opposite of the situation described in the question.

Common Pitfalls:
Students sometimes confuse the type of budget balance (deficit or surplus) with the method of preparing the budget (zero based or performance based). It is important to separate the question “how big is the gap between spending and revenue” from the question “how are budget items proposed and justified.” Another mistake is to assume that any modern sounding term such as performance based budgeting must be correct, without checking whether it addresses the relationship between expenditure and revenue. Looking carefully at the keywords “exceeds” and “revenue” helps guide you towards the idea of a deficit.

Final Answer:
When government expenditure on the current account exceeds government revenue on the current account, the situation is called deficit budgeting.