Question : A government budget shows a primary deficit of INR 6,900 crore. The revenue expenditure on interest payments is INR 400 crore. Fiscal deficit is equal to:
Option 1: INR 6,500 crore
Option 2: INR 7,300 crore
Option 3: INR 7,100 crore
Option 4: INR 6,900 crore
Correct Answer: INR 7,300 crore
Solution : The correct answer is INR 7,300 crore .
A fiscal deficit is the difference between the government's total expenditure and its total revenue, excluding borrowing. It reflects the government's borrowing to meet its expenses, leading to increased debt.
Fiscal Deficit = Primary Deficit + Interest Payment
Fiscal Deficit = INR 6,900 crore + INR 400 crore
Fiscal Deficit = INR 7,300 crore.
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