SSC CHSL 2025 PYQ — Question 97

The correct answer is Option 2: Revenue Deficit.
Explanation:
A Revenue Deficit occurs when the government's 'revenue expenditure' exceeds its 'revenue receipts.' This deficit relates solely to transactions that affect the government's current income and expenditure.
Revenue Receipts: These include tax and non-tax revenue (such as fees and dividends).
Revenue Expenditure: This comprises the government's day-to-day expenses that do not result in the creation of any assets (such as salaries, pensions, interest payments, and subsidies).
Significance: If the revenue deficit is high, it implies that the government is unable to generate sufficient income even to fund its normal administrative activities and is compelled to borrow to meet these needs.

Analysis of Other Options:

• Fiscal Deficit: This is the difference between the government's total income (excluding borrowings) and its total expenditure. It encompasses both current and capital transactions.
• Primary Deficit: This is derived by subtracting interest payments from the fiscal deficit.
• Trade Deficit: This represents the difference between a country's imports and exports; it is not directly related to the internal deficits of the government budget.

Key Formulas:

• Revenue Deficit = Revenue Expenditure - Revenue Receipts
• Fiscal Deficit = Total Expenditure - (Revenue Receipts + Non-debt Capital Receipts)
• Primary Deficit = Fiscal Deficit - Interest Payments

Potential Questions for Upcoming Exams:
Question: What is the difference between the fiscal deficit and interest payments called?
Answer: Primary Deficit.
Question: Which part of the budget details the assets and liabilities that have implications for the future?
Answer: Capital Budget. Question: What type of expenditure is the 'payment of interest' on loans taken by the government?
Answer: Revenue Expenditure.