Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Government Budget and Economy

Question:

From the following data, Calculate Primary Deficit.

 

 ₹ (crore) 

Revenue expenditure

22,250

Capital expenditure

28,000

Revenue receipts

17,750

Capital receipts (net of borrowing) 

20,000

Interest payment

5,000

Borrowings

12,500

Options:

₹7,500

₹12,500

 

₹5,000

₹17,750

Correct Answer:

₹7,500

Explanation:

Primary Deficit=Fiscal DeficitInterest Payments

Fiscal deficit is the difference between the government’s total expenditure and its total receipts excluding borrowing.

Let's calculate it using the provided data:

  1. Fiscal Deficit =Total Expenditure−Total Receipts

    =(Revenue Expenditure+Capital Expenditure)−(Revenue Receipts+Capital Receipts (net of borrowing))

    =(22,250+28,000)−(17,750+20,000)

    =50,250−37,750

    =12,500 crore

  2. Primary Deficit =Fiscal Deficit−Interest Payments

    =12,500−5,000

    =7,500 crore

     Therefore, the primary deficit is ₹7,500 crore.