A government budget shows a primary deficit of ₹6,900 crore. The revenue expenditure on interest payment is ₹400 crore. Fiscal deficit is equal to:
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. ₹7,300 crore.
Given:
Primary deficit = ₹6,900 crore
Interest payment (part of revenue expenditure) = ₹400 crore
The formula to calculate fiscal deficit is:
Fiscal deficit = Primary deficit + Interest payments
Substituting the values:
Fiscal deficit = ₹6,900 crore (Primary deficit) + ₹400 crore (Interest payment)
Fiscal deficit = ₹7,300 crore
So, the fiscal deficit is equal to ₹7,300 crore.