Why is payment of interest a revenue expenditure?
Payment of interest is treated as a revenue expenditure, because it neither reduces liability of the payer nor adds to his assets.
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
A government budget shows a primary deficit of Rs. 6,900 crore. The revenue expenditure on interest payment is Rs. 400 crore. How much is the fiscal deficit?