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 Calculation: The fiscal deficit is calculated as: Fiscal Deficit = Total Expenditure − Total Receipts (excluding borrowings).

Step 2: Calculation using provided data: Given Total Expenditure = 15,000 crores, and Total Receipts (excluding borrowings) = Revenue Receipts + Loan Recoveries = 3500 + 7500 = 11,000 crores. Therefore, Fiscal Deficit = 15,000 − 11,000 = 4000 crores.

Step 3: Accounting for Borrowings: The fiscal deficit typically excludes loan recoveries but includes market borrowings. Net Fiscal Deficit = 15,000 − (3500 + 2500 + 7500) = 15,000 − 13,500 = 1500 crores.