In the context of public finance, 'Vertical Fiscal Imbalance' refers to:
A. Only the primary deficit
B. Imbalance between revenue and expenditure of the same level of government
C. Imbalance between capital and revenue budgets only
D. Mismatch between revenue-raising powers and expenditure responsibilities across different levels of government
Answer: Option D
Solution (By JKSSB Mock Tests)
Vertical fiscal imbalance arises when the revenue powers and expenditure responsibilities of different tiers of government (Centre and States) are mismatched.
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