Match the condition in List-I with what it means in List-II:
| List-I | List-II | ||
|---|---|---|---|
| (A) | Revenue deficit is zero | (I) | Capital expenditure equals non-debt creating capital receipts |
| (B) | Primary deficit is zero | (II) | Revenue receipts just cover revenue expenditure |
| (C) | Fiscal deficit is zero | (III) | Borrowing is just enough to meet interest payments |
| (D) | Revenue deficit equals fiscal deficit | (IV) | The government does not need to borrow at all |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) - (II), (B) - (III), (C) - (IV), (D) - (I)
Each condition follows from a deficit formula. The fiscal deficit is the government’s borrowing; the primary deficit is the fiscal deficit minus interest payments; and fiscal deficit = revenue deficit + capital expenditure − non-debt creating capital receipts.
| List-I | List-II | Reason |
|---|---|---|
| (A) Revenue deficit is zero | (II) Revenue receipts just cover revenue expenditure | Revenue deficit = revenue expenditure − revenue receipts. It is zero when the receipts just cover the expenditure. |
| (B) Primary deficit is zero | (III) Borrowing is just enough to meet interest payments | Primary deficit = fiscal deficit − interest payments. It is zero when all the borrowing goes into interest. |
| (C) Fiscal deficit is zero | (IV) The government does not need to borrow at all | The fiscal deficit shows the total borrowing requirement. When it is zero, nothing has to be borrowed. |
| (D) Revenue deficit equals fiscal deficit | (I) Capital expenditure equals non-debt creating capital receipts | Fiscal deficit = revenue deficit + capital expenditure − non-debt creating capital receipts. The two deficits are equal when the last two terms cancel. |
NCERT (2026-27): “5.2.1 Measures of Government Deficit Revenue Deficit: The revenue deficit refers to the excess of government’s revenue expenditure over revenue receipts” “… The fiscal deficit will have to be financed through borrowing. Thus, it indicates the total borrowing requirements of the government from all sources. …” “… From the way gross fiscal deficit is measured as given above, it can be seen that revenue deficit is a part of fiscal deficit (Fiscal Deficit = Revenue Deficit + Capital Expenditure - non-debt creating capital receipts). …” “Primary Deficit: We must note that the borrowing requirement of the government includes interest obligations on accumulated debt. The goal of measuring primary deficit is to focus on present fiscal imbalances. To obtain an estimate of borrowing on account of current expenditures exceeding revenues, we need to calculate what has been called the primary deficit. It is simply the fiscal deficit minus the interest payments” |