CA Foundation · Business Economics · Public Finance
In a government budget, total revenue receipts are Rs 2,000 crore, recovery of loans and other non-debt capital receipts are Rs 100 crore, and total expenditure is Rs 2,900 crore. What is the fiscal deficit?
The fiscal deficit is Rs 800 crore. It equals total expenditure of Rs 2,900 crore minus revenue receipts of Rs 2,000 crore and non-debt capital receipts of Rs 100 crore. It measures the government's total borrowing requirement for the year.
- ARs 800 croreCorrect
- BRs 900 crore
- CRs 1,000 crore
- DRs 700 crore
Explanation
Fiscal deficit = total expenditure - (revenue receipts + non-debt capital receipts) = 2,900 - (2,000 + 100) = Rs 800 crore. Rs 900 crore wrongly ignores the non-debt capital receipts. Check: borrowing needed must equal 800.
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