CA Foundation · Business Economics · Public Finance
In a government budget, total revenue receipts are Rs 18,000 crore, revenue expenditure is Rs 22,500 crore, and capital expenditure is Rs 6,000 crore. Recovery of loans is Rs 1,500 crore and other non-debt capital receipts are Rs 500 crore. What is the revenue deficit?
The revenue deficit is Rs 4,500 crore, found by subtracting revenue receipts of Rs 18,000 crore from revenue expenditure of Rs 22,500 crore. Capital expenditure and capital receipts are excluded from this measure because it covers only the revenue account.
- ARs 4,500 croreCorrect
- BRs 10,500 crore
- CRs 2,500 crore
- DRs 8,500 crore
Explanation
Revenue deficit = revenue expenditure - revenue receipts = 22,500 - 18,000 = Rs 4,500 crore. Rs 10,500 crore wrongly adds capital expenditure to the revenue deficit and deducts nothing else. Capital items are not part of the revenue deficit calculation.
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