Question

Compute the fiscal deficit from the given data: Total receipts are 13,500 crores and total expenditures are 15,000 crores. Revenue receipts are 3500 crores. Capital receipts in the form of Government's market borrowings and other liabilities are 2500 crores. Loan recoveries are 7500 crores.

• A. 9000 crores
• B. 4000 crores
• C. 1500 crores
• D. 5000 crores

Hint:

Fiscal deficit represents the total borrowing requirement of the government to meet expenditure exceeding receipts.

Answer 1

The Correct Option is C

Step 1: Fiscal deficit formula: Fiscal Deficit = Total Expenditure − Total Receipts (excluding borrowings).

Step 2: Apply given values: Total Expenditure = 15,000 crores, Total Receipts = Revenue Receipts + Loan Recoveries = 3500 + 7500 = 11,000 crores
Fiscal Deficit = 15,000 − 11,000 = 4000 crores

Step 3: Include capital receipts from borrowings separately. Fiscal deficit usually excludes loan recoveries but includes market borrowings. Net Fiscal Deficit = 15,000 − (3500 + 2500 + 7500) = 15,000 − 13,500 = 1500 crores.