Question

revenue defict is estimated to be 20,000 crores, and borrowing is estimated to be 15,000 crores. if expenditure on interest payment is estimated to be 50% of the revenue deficit. find deficit and primary deficit​

Answer 1

Answer:

Particulars (₹in crores)

Fiscal Deficit

Revenue Deficit

Primary Deficit

Revenue Receipts

Non- debt Capital Receipts

12,000

9,000

5,000

6,000

10,000

Solution:

(a) Fiscal deficit= Revenue deficit + (Capital expenditure – Non-debt creating capital receipts)

₹12,000 crores= ₹9,000 + Capital expenditure- ₹10,000)

Capital expenditure= ₹12,000 crores – ₹9,000 crores + 10,000 crores

= ₹13,000 crores

(b) Total expenditure = Revenue expenditure + Capital expenditure

Revenue expenditure = Revenue defici + Revenue receipt

= ₹9,000 crores + ₹6,000 crores

= ₹15,000 crores

Total expenditure = Revenue expenditure + Capital expenditure

=₹15,000 crores + ₹13,000 crores

= ₹28,000 crores

(c) Primary deficit = Fiscal deficit – Interest payments

₹5,000 crores = ₹12,000 crores – Interest Payments

Interest Payments = ₹12,000 crores – ₹5,000 crores

= ₹7,000 crores