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.
(a) I and II only
(b) II and III only
(c) I and III only
(d) I, II and III
Correct Answer: (d) I, II and III
UPSC Prelims 2025 GS Paper's Solution
Explanation :
The key fiscal‐deficit concepts are:
- Revenue deficit = Revenue expenditure − Revenue receipts
- Fiscal deficit = Total expenditure − (Revenue receipts + Non‐debt capital receipts) = Government borrowings
- Primary deficit = Fiscal deficit − Interest payments
Given: • Revenue expenditure = ₹80,000 cr • Revenue receipts = ₹60,000 cr • Borrowings = ₹10,000 cr • Interest payments = ₹6,000 cr
I. Revenue deficit = 80,000 − 60,000 = 20,000 cr ✔
II. Fiscal deficit = Borrowings = 10,000 cr ✔ (Or equivalently, Total outlays 80,000 − Receipts 60,000 = 20,000; if 10,000 is met by non‐debt capital receipts, the remaining 10,000 is financed by fresh borrowings.)
III. Primary deficit = Fiscal deficit − Interest payments = 10,000 − 6,000 = 4,000 cr ✔
Hence all three statements are correct.
Answer: (d) I, II and III.
