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Question

From the following data about a government budget, find (a) revenue deficit, (b) fiscal deficit, and (c) primary deficit:

Items (Rs in lakh)

(i) Tax revenue 50

(ii) Revenue expenditure 110

(iii) Capital expenditure 210

(iv) Non-tax revenue 30

(v) Capital receipts net of borrowing 140

(vi) Interest payments 20

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Solution

(a) Revenue Deficit = Revenue expediture - Revenue receipts (Tax revenue + Non-tax revenue)

= Rs. 110 lakh - (Rs. 50 lakh + Rs. 30 lakh)

= Rs. 110 lakh - Rs. 80 lakh

= Rs. 30 lakh

(b) Fiscal Deficit = Revenue expenditure + Capital expenditure - Revenue receipts - Capital receipts net of borrowing

= Rs. 110 lakh + Rs. 210 lakh - (Rs. 50 lakh + Rs. 30 lakh) - Rs. 140 lakh

= Rs. 110 lakh + Rs. 210 lakh - Rs. 80 lakh - Rs. 140 lakh

= Rs. 320 lakh - Rs. 220 lakh

= Rs. 100 lakh

(c) Primary Deficit = Fiscal deficit - Interest payments

= Rs. 100 lakh - Rs 20 lakh

= Rs. 80 lakh

(a) Revenue deficit = Rs. 30 lakh

(b) Fiscal deficit = Rs. 100 lakh

(c) Primary deficit = Rs. 80 lakh


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