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?

1. Revenue deficit is ₹20,000 crores.
2. Fiscal deficit is ₹10,000 crores.
3. Primary deficit is ₹4,000 crores.

Select the correct answer using the code given below:

1. I and II only
2. II and III only
3. I and III only
4. I, II and III

Explanation

Statement I is correct

• Revenue Deficit = Revenue Expenditure – Revenue Receipts;
  • (₹80000-₹60000 = ₹20000 crores)

Statement II is correct

• Fiscal Deficit = Total Expenditure – Total Receipts except Borrowing and Other liabilities;
  • (₹80000-₹60000-₹10000 (exclude borrowings)) assuming capital expenditure “0” = ₹10000 crores.

Statement III is correct

• Primary Deficit = Fiscal Deficit – Interest Payment;
  • (₹20000-₹10000-₹6000) = ₹4000 crores.

Answer: (d) I, II and III; Difficulty Level: Easy