Suppose the revenue expenditure is ₹ 80,000 crores and the revenue receipts of the Government are ₹ 60,000 crores. The Government budget also shows borrowings of ₹ 10,000 crores and interest payments of ₹ 6,000 crores. Which of the following statements are correct?
- I.Revenue deficit is ₹ 20,000 crores.
- II.Fiscal deficit is ₹ 10,000 crores.
- III.Primary deficit is ₹ 4,000 crores.
Select the correct answer using the code given below.
Answer & explanation
Answer: (d) I, II and III
All three are correct. Revenue deficit is revenue expenditure minus revenue receipts, so ₹80,000 crore − ₹60,000 crore = ₹20,000 crore. The fiscal deficit is the government's total borrowing requirement, here ₹10,000 crore, and the primary deficit, which is that figure without the ₹6,000 crore of interest, is ₹4,000 crore.
- ✓ I Spending on the revenue account (₹80,000 crore) overshoots what the government earns on that account (₹60,000 crore) by ₹20,000 crore, and that gap is the revenue deficit.
- ✓ II The fiscal deficit shows how much the government must borrow. The Budget shows borrowings of ₹10,000 crore, so the fiscal deficit is ₹10,000 crore.
- ✓ III Take the ₹10,000 crore fiscal deficit and leave out the ₹6,000 crore that goes to interest; what remains, ₹4,000 crore, is the primary deficit.
Remember · Revenue deficit = revenue expenditure − revenue receipts. Fiscal deficit = borrowing requirement. Primary deficit = fiscal deficit − interest payments.
📘 Read it in NCERT: Class 12 Introductory Macroeconomics, Ch 5 (practise this chapter) · Class 12 Introductory Macroeconomics, Ch 5 (practise this chapter) · Class 12 Introductory Macroeconomics, Ch 5 (practise this chapter)
Sources
- NCERT Class 12 · Introductory Macroeconomics, Chapter 5 “The revenue deficit refers to the excess of government's revenue expenditure over revenue receipts Revenue deficit = Revenue expenditure – Revenue receipts”
- NCERT Class 12 · Introductory Macroeconomics, Chapter 5 “The fiscal deficit will have to be financed through borrowing. Thus, it indicates the total borrowing requirements of the government from all sources.”
- NCERT Class 12 · Introductory Macroeconomics, Chapter 5 “It is simply the fiscal deficit minus the interest payments Gross primary deficit = Gross fiscal deficit – Net interest liabilities”
Question and answer: UPSC's official GS Paper I (2025, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·