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Ad hoc Treasury Bill System of meeting budget deficit in India was abolished on
1. 1st April, 1992
2. 1st April, 1994
3. 31st March, 1996
4. 31st March, 1997

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Correct Answer - Option 4 : 31st March, 1997

The correct answer is 31st March 1997.

  • Ad hoc Treasury Bill System of meeting budget deficit in India was abolished on 31st March 1997.
  • Ad hoc Treasury Bill System:
    • All treasury bills, ad hoc or ordinary, are sold by the RBI on behalf of the central government.
    • Until July 12, 1965, they used to be sold by lenders at weekly auctions.
    • From that date, they are made available ‘on tap’ throughout the week at a rate of discount fixed by the RBI.
    • This change was made to make the ready supply of bills available to all investors at all times for investment of their temporary surpluses and also to mop up larger amounts of such surpluses for the government.
    • The latter, of course, has been eager to borrow all the funds offered to it.

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