CA Foundation · Business Economics · Public Finance
In a year, a government's total expenditure is Rs 9,00,000 crore. Its revenue receipts are Rs 5,50,000 crore and its non-debt capital receipts (recoveries of loans and disinvestment) are Rs 50,000 crore. What is its fiscal deficit?
The fiscal deficit is Rs 3,00,000 crore. It equals total expenditure of Rs 9,00,000 crore minus revenue receipts of Rs 5,50,000 crore and non-debt capital receipts of Rs 50,000 crore, and it represents the government's net borrowing requirement for the year.
- ARs 3,00,000 croreCorrect
- BRs 3,50,000 crore
- CRs 4,00,000 crore
- DRs 3,00,000 crore less interest payments
Explanation
Fiscal deficit = total expenditure - (revenue receipts + non-debt capital receipts) = 9,00,000 - (5,50,000 + 50,000) = 3,00,000 crore. Rs 3,50,000 crore wrongly ignores non-debt capital receipts, and Rs 4,00,000 crore wrongly subtracts only half of the receipts. The final option is not a defined measure.
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