Suppose the revenue expenditure is ₹ 80,000 crores and the revenue receipts of the Government are ₹ 60,000 crores. The Government budget also shows borrowings of ₹ 10,000 crores and interest payments of ₹ 6,000 crores. Which of the following statements are correct? I. Revenue deficit is ₹ 20,000 crores. II. Fiscal deficit is ₹ 10,000 crores. III. Primary deficit is ₹ 4,000 crores. Select the correct answer using the code given below.
- (a) I and II only
- (b) II and III only
- (c) I and III only
- (d) I, II and III ✓ UPSC's answer
Why the answer is (d)
• Revenue deficit = revenue expenditure − revenue receipts = 80,000 − 60,000 = ₹20,000 crore, so statement I is correct.
• Fiscal deficit equals total borrowings (the gap between total expenditure and total non-borrowed receipts); the budget shows borrowings of ₹10,000 crore, so the fiscal deficit is ₹10,000 crore and statement II is correct.
• Primary deficit = fiscal deficit − interest payments = 10,000 − 6,000 = ₹4,000 crore, so statement III is correct.
• Note that the revenue deficit can exceed the fiscal deficit only if there are large non-debt capital receipts (such as disinvestment) financing revenue spending, which is what these figures imply.
• Hence I, II and III, option (d).
Why the other options are wrong
- (a) I and II only
- Statement III is also correct: primary deficit is fiscal deficit minus interest, 4,000 crore.
- (b) II and III only
- Statement I is also correct: revenue deficit is 20,000 crore.
- (c) I and III only
- Statement II is also correct: fiscal deficit equals borrowings of 10,000 crore.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2025, held on 25 May 2025. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.