Consider the data about a government budget and answer the following:

How much are interest payments?

₹ 5,000 crores

The correct answer is Option 2: ₹ 5,000 crores

Interest payment = 25% of revenue deficit

Revenue Deficit=Revenue Expenditure−Revenue Receipts

                      = 70,000−50,000

                      = 20,000
Interest payment = 25 % of 20,000 crores
Interest payment = ₹ 5,000 crores

Note: Interest payments are an expenditure but are already accounted for within revenue expenditure. The revenue deficit is calculated as revenue expenditure minus revenue receipts, which includes interest payments. Thus, interest payments don’t separately add to the deficit.