Suppose the revenue expenditure is Rs.80,000 crores and the revenue receipts of the Government are Rs.60,000 crores. The Government budget also shows borrowings of Rs.10,000 crores and interest payments of Rs.6,000 crores. Which of the following statements are correct? I. Revenue deficit is Rs.20,000 crores. II. Fiscal deficit is Rs.10,000 crores. III. Primary deficit is Rs.4,000 crores. Select the correct answer using the code given below.

1. A. I and II only
2. B. II and III only
3. C. I and III only
4. D. I, II and III

Answer: D

Explanation

Let’s calculate each deficit based on the given figures:
I. Revenue Deficit = Revenue Expenditure – Revenue Receipts
= Rs. 80,000 crores – Rs. 60,000 crores = Rs. 20,000 crores.
So, statement I is correct.

II. Fiscal Deficit = Total Expenditure – (Revenue Receipts + Non-debt Capital Receipts)
Alternatively, Fiscal Deficit is equal to the total borrowings and other liabilities of the government. Given that borrowings are Rs. 10,000 crores, the fiscal deficit is Rs. 10,000 crores.
So, statement II is correct.

III. Primary Deficit = Fiscal Deficit – Interest Payments
= Rs. 10,000 crores – Rs. 6,000 crores = Rs. 4,000 crores.
So, statement III is correct.

Since all three statements are correct, the correct option is D. Understanding government budget concepts and deficit calculations is fundamental for UPSC Economy.