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CMA Final · Corporate Financial Reporting · Government Accounting in India

A State's figures (₹ crore): Revenue receipts 12,000; Non-debt capital receipts 500; Revenue expenditure 12,600; Capital expenditure 2,900, of which loans and advances are 400. Interest payments included in revenue expenditure are 1,800. Compute the fiscal deficit and the primary deficit.

Total expenditure is ₹15,500 crore. Deducting revenue receipts of 12,000 and non-debt capital receipts of 500 gives a fiscal deficit of ₹3,000 crore. Primary deficit excludes interest payments, so it is 3,000 minus 1,800, or ₹1,200 crore.

  1. AFiscal deficit 3,000; primary deficit 1,200Correct
  2. BFiscal deficit 3,000; primary deficit 4,800
  3. CFiscal deficit 2,500; primary deficit 700
  4. DFiscal deficit 3,500; primary deficit 1,700

Explanation

Total expenditure = 12,600 + 2,900 = 15,500. Fiscal deficit = 15,500 − 12,000 − 500 = 3,000 (loans are already within capital expenditure). Primary deficit = 3,000 − 1,800 = 1,200. Adding interest gives 4,800, which is the wrong sign; 2,500 and 3,500 wrongly adjust for the capital receipts.

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