Government Budget and The Economy

Higher Order Thinking Skills Questions

Is fiscal deficit a part of budgetary deficit?

Is fiscal deficit a wider concept than revenue deficit?

What should be the safe limit of fiscal deficit as a percentage of GDP?

Why is repayment of loan a capital expenditure?

Why is payment of interest a revenue expenditure?

Giving reasons, categorize the following into revenue receipts and capital receipts:

a) Recovery of loans
b) Corporation tax
c) Dividends on investments made by government
d) Sale of a public sector undertaking

Giving reasons, categorise the following into revenue expenditure and capital expenditure:

a) Subsidies
b) Grants given to the state governments
c) Construction of school buildings

From the budget estimates of Government of India for the year 2000-01 Calculate (i) Revenue deficit
(ii) Fiscal deficit and (iii) Primary deficit:

(Rs. Crores)

(a) Revenue Receipts 2,037

(b) Revenue Expenditure 2,811
(c) Capital receipts 1,348
(d) Capital expenditure 574
(e) Recoveries of loans and other receipts 235
(f) Borrowing and other liabilities 1,113
(g) Interest payments 1,013