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Q61 (IAS/2025) Economy › Government Finance & Budget › Fiscal deficit concepts Answer Verified

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.

Result
Your answer: —  ·  Correct: D
Explanation

All three statements are correct based on the definitions of different budget deficits.

**Statement I is correct:** Revenue Deficit is the difference between the government's revenue expenditure and revenue receipts, calculated as Revenue Expenditure - Revenue Receipts[1]. Therefore, Revenue Deficit = ₹80,000 crores - ₹60,000 crores = ₹20,000 crores.

**Statement II is correct:** Fiscal deficit is equal to the total borrowing[2]. Given that the government's borrowings are ₹10,000 crores, the fiscal deficit is ₹10,000 crores.

**Statement III is correct:** Primary deficit is the fiscal deficit minus the interest payments (Gross primary deficit = Gross fiscal deficit – Net interest liabilities)[3]. Therefore, Primary Deficit = ₹10,000 crores - ₹6,000 crores = ₹4,000 crores.

Since all three statements (I, II, and III) are verified as correct, the answer is option D.

Sources
  1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > 4.5 Government Deficits > p. 152
  2. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > 4.5 Government Deficits > p. 153
  3. [3] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Gross fiscal deficit = Net borrowing at home + Borrowing from RBI + Borrowing from abroad > p. 72
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Q. Suppose the revenue expenditure is ₹ 80,000 crores and the revenue receipts of the Government are ₹ 60,000 crores. The Government budget …
At a glance
Origin: From standard books Fairness: High fairness Books / CA: 10/10 · 0/10
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This is a classic 'Sitter' disguised as a math problem. It rewards conceptual clarity over rote learning. If you know the three basic formulas from NCERT Macroeconomics, this is free marks. No current affairs linkage is required; it is pure static theory applied numerically.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
What is the revenue deficit if a government's revenue expenditure is ₹80,000 crore and revenue receipts are ₹60,000 crore?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > 4.5 Government Deficits > p. 152
Presence: 5/5
“When a government spends more than it collects by way of revenue, it incurs a deficit. There are mainly three ways through which government captures this deficit. 1. Revenue Deficit: Revenue Deficit is the difference between the government's revenue expenditure and revenue receipts. Revenue Deficit = Revenue Expenditure - Revenue Receipts Revenue Deficit implies that government's current expenses are more than its current revenues and will have to use up the savings of other sectors of the economy to finance its consumption expenditure. Since a major part of the revenue expenditure (salary, pension, interest payments, subsidies etc.) is committed expenditure, it cannot be reduced.”
Why this source?
  • Defines Revenue Deficit as the difference between revenue expenditure and revenue receipts.
  • Provides the explicit formula: Revenue Deficit = Revenue Expenditure - Revenue Receipts.
Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > 5.2.1 Measures of Government Deficit > p. 71
Presence: 5/5
“When a government spends more than it collects by way of revenue, it incurs a budget deficit6 . There are various measures that capture government deficit and they have their own implications for the economy. Revenue Deficit: The revenue deficit refers to the excess of government's revenue expenditure over revenue receipts Revenue deficit = Revenue expenditure – Revenue receipts Table 5.1: Receipts and Expenditures of the Central Government, 2023–24 (P.A.) • Col1: 1. Revenue Receipts (a+b); (As per cent of GDP): 9.2 • Col1: (a) Tax revenue (net of states' share); (As per cent of GDP): 7.9 • Col1: (b) Non-tax revenue; (As per cent of GDP): 1.4 • Col1: 2.”
Why this source?
  • Reiterates that revenue deficit refers to excess of revenue expenditure over revenue receipts.
  • Gives the same formulaic expression useful for direct calculation.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > II. Revenue Deficit > p. 110
Presence: 5/5
“• It is the excess of revenue expenditure over revenue receipts.• Revenue Deficit = Revenue Expenditure − Revenue Receipts.• This revenue deficit is funded either through borrowings from the public or through disinvestment or by cutting revenue expenditure (mainly subsidies).”
Why this source?
  • States revenue deficit equals revenue expenditure minus revenue receipts.
  • Notes how such a deficit is typically financed, underscoring practical relevance of the calculation.
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Which one among the following items comprises the major portion of revenue expenditure of the Union Government of India? (a) Salaries (b) Interest Payments (c) Road Transport and Highways (d) Defence Services