Identify the correct statement:
Show Hint
- Revenue deficit includes capital receipts.
- Fiscal deficit is the difference between total expenditure and total receipts excluding borrowings.
- Primary deficit includes interest payments.
- Tax is a non-debt creating capital receipt.
The Correct Option is B
Solution and Explanation
Government budget deficits are categorized into Revenue Deficit, Fiscal Deficit, and Primary Deficit. Each has a specific formula.
Step 2: Detailed Explanation:
Let us evaluate each option:
- (A) Incorrect. Revenue deficit = Revenue Expenditure $-$ Revenue Receipts. It does not include capital receipts.
- (B) Correct. Fiscal Deficit = Total Expenditure $-$ Total Receipts (excluding borrowings). It shows the total borrowing requirement of the government.
- (C) Incorrect. Primary Deficit = Fiscal Deficit $-$ Interest Payments. It excludes interest payments.
- (D) Incorrect. Tax is a Revenue Receipt, not a capital receipt. Non-debt creating capital receipts are items like disinvestment.
Step 3: Final Answer:
The correct statement is (B): Fiscal deficit is the difference between total expenditure and total receipts excluding borrowings.
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