Suppose the revenue expenditure is 80 000 crores and the revenue receipts of the Government are 60 0...........

Economic Affairs Public Finance and Debt Management

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:

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UPSC CSE 2025 (General Studies-1)

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I and II only

II and III only

I and III only

I, II and III

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Explanation:

- Statement I: Revenue deficit is calculated as the difference between revenue expenditure and revenue receipts. Here, it's \(80,000 - 60,000 = 20,000\) crores. Correct.

- Statement II: Fiscal deficit is derived by subtracting total receipts (excluding borrowings) from total expenditure. Total expenditure here is \(80,000\) crores and revenue receipts are \(60,000\) crores. With borrowings accounted for, the fiscal deficit equals \(80,000 - 70,000 = 10,000\) crores. Correct.

- Statement III: Primary deficit is fiscal deficit minus interest payments. Thus, \(10,000 - 6,000 = 4,000\) crores. Correct.

- Option 4: Since all three statements are correct, option 4 is the right answer.