Q. Suppose the revenue expenditure is ₹ 80,000 crores and the revenue receipts of the Government are ₹ 60,000 crores. The Government budget also shows borrowings of ₹ 10,000 crores and interest payments of ₹ 6,000 crores. Which of the following statements are correct?
I. Revenue deficit is ₹ 20,000 crores.
II. Fiscal deficit is ₹ 10,000 crores.
III. Primary deficit is ₹ 4,000 crores.
Select the correct answer using the code given below.
Exp) Option d is the correct answer.
Given Data:
- Revenue Expenditure = ₹80,000 crores
- Revenue Receipts = ₹60,000 crores
- Borrowings (Fiscal Deficit) = ₹10,000 crores
- Interest Payments = ₹6,000 crores
Statement I is correct: Revenue Deficit
Definition:
Revenue Deficit = Revenue Expenditure – Revenue Receipts
Calculation:
Revenue Expenditure = ₹80,000 crores
Revenue Receipts = ₹60,000 crores
So,
Revenue Deficit = ₹80,000 – ₹60,000 = ₹20,000 crores
Statement II is correct: Fiscal Deficit
Definition:
- Fiscal Deficit = Total Expenditure – Total Receipts (excluding borrowings)
In this question, total borrowings by the government are ₹10,000 crores, which means the gap between the government’s total expenditure and its non-borrowed receipts is being met by borrowing ₹10,000 crores.
Fiscal Deficit is the total borrowing requirement of the government. In the given scenario, the borrowings directly represent the fiscal deficit.
Fiscal Deficit = Borrowings = 10,000 crores
Statement III is correct: Primary Deficit
Definition:
Primary Deficit = Fiscal Deficit – Interest Payments
Calculation:
Fiscal Deficit = ₹10,000 crores
Interest Payments = ₹6,000 crores
Primary Deficit = ₹10,000 – ₹6,000 = ₹4,000 crores
Hence, All three statements are correct.
Source: https://nios.ac.in/media/documents/SrSec318NEW/318_Economics_Eng/318_Economics_Eng_Lesson29.pdf
https://www.egyankosh.ac.in/bitstream/123456789/59908/3/Unit-15.pdf
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