QUESTION

Hard

Economy

Prelims 2025

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.

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Explanation

Revenue Deficit, Fiscal Deficit, and Primary Deficit are key indicators used to assess a government's financial health.

✅ I. Revenue Deficit = ₹20,000 crores – Correct

Definition: Revenue Deficit = Revenue Expenditure − Revenue Receipts
Calculation: ₹80,000 crores − ₹60,000 crores = ₹20,000 crores

✅ II. Fiscal Deficit = ₹10,000 crores – Correct

Definition: Fiscal Deficit = Total Expenditure − Total Receipts (excluding borrowings)
Alternatively, it reflects total borrowings needed to meet the gap
Given: Borrowings = ₹10,000 crores ⇒ Fiscal Deficit = ₹10,000 crores

✅ III. Primary Deficit = ₹4,000 crores – Correct