Question

Select the correct statements: A. Fiscal Deficit = Budget Deficit - Interest Payments, B. Revenue Deficit = Revenue Expenditure - Revenue Receipts, C. Budget Deficit = Total Expenditure - Total Receipts, D. Primary Deficit = Fiscal Deficit + Interest Payments, E. Current Deficit = Budget Deficit + Borrowings.

• A. B, C Only
• B. A, B, C Only
• C. A, C, D, E Only
• D. A, D, E Only

Hint:

Always remember: \(\text{Primary Deficit}=\text{Fiscal Deficit}-\text{Interest Payments}\) and \(\text{Revenue Deficit}=\text{Revenue Expenditure}-\text{Revenue Receipts}\).

Answer 1

The Correct Option is A

Concept: Fiscal deficit, revenue deficit, budget deficit and primary deficit are important budgetary concepts. Each deficit has a specific formula, so every statement must be checked separately.

Step 1: Check Statement A.
Statement A says: \[ \text{Fiscal Deficit}=\text{Budget Deficit}-\text{Interest Payments} \] This is incorrect. The correct formula is: \[ \text{Primary Deficit}=\text{Fiscal Deficit}-\text{Interest Payments} \] So statement A is incorrect.

Step 2: Check Statement B.
Revenue deficit is the excess of revenue expenditure over revenue receipts. \[ \text{Revenue Deficit}=\text{Revenue Expenditure}-\text{Revenue Receipts} \] So statement B is correct.

Step 3: Check Statement C.
Budget deficit is generally defined as the excess of total expenditure over total receipts. \[ \text{Budget Deficit}=\text{Total Expenditure}-\text{Total Receipts} \] So statement C is correct.

Step 4: Check Statement D.
Statement D says: \[ \text{Primary Deficit}=\text{Fiscal Deficit}+\text{Interest Payments} \] This is incorrect because interest payments are subtracted from fiscal deficit, not added. \[ \text{Primary Deficit}=\text{Fiscal Deficit}-\text{Interest Payments} \]

Step 5: Check Statement E.
Current deficit is not defined as budget deficit plus borrowings. Hence statement E is also incorrect. Therefore, only statements B and C are correct.