Consider the following statements:

Effective revenue deficit is revenue deficit minus grants to states for creation of capital assets.

Primary Deficit is measured by fiscal deficit less interest payments.

Revenue Deficit is the difference between the total expenditure and revenue receipts plus non-debt capital receipts.

Which of the above is / are correct?

Question

Statement 1 is correct: Revenue Deficit refers to the excess of revenue expenditure over revenue receipts or the extent of borrowings used for revenue expenditure. Effective revenue deficit is revenue deficit minus grants to states for creation of capital assets.
Statement 2 is correct: Primary Deficit is measured by fiscal deficit less interest payments. It shows what the Fiscal Deficit would've been for this particular year if no interests were to be paid. It ignores the loans taken by the previous Governments in previous financial years.
Statement 3 is incorrect: Fiscal Deficit is the difference between the total expenditure and revenue receipts plus non-debt capital receipts. It indicates the amount the Government has to borrow to meet its annual targets.

GKToday Admin · Accepted Answer

Only 1 and 2

Statement 1 is correct: Revenue Deficit refers to the excess of revenue expenditure over revenue receipts or the extent of borrowings used for revenue expenditure. Effective revenue deficit is revenue deficit minus grants to states for creation of capital assets.
Statement 2 is correct: Primary Deficit is measured by fiscal deficit less interest payments. It shows what the Fiscal Deficit would've been for this particular year if no interests were to be paid. It ignores the loans taken by the previous Governments in previous financial years.
Statement 3 is incorrect: Fiscal Deficit is the difference between the total expenditure and revenue receipts plus non-debt capital receipts. It indicates the amount the Government has to borrow to meet its annual targets.