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    Question

    Consider the following statements regarding the Union

    Budget and Fiscal Indicators: 1. The fiscal deficit represents the excess of total revenue receipts over total expenditure. 2. The primary deficit is the fiscal deficit minus interest payments. 3. The effective revenue deficit excludes grants for the creation of capital assets. Which of the above statements is/are correct?
    A 1 and 2 only Correct Answer Incorrect Answer
    B 2 and 3 only Correct Answer Incorrect Answer
    C 1 and 3 only Correct Answer Incorrect Answer
    D 2 only Correct Answer Incorrect Answer
    E 1, 2 and 3 Correct Answer Incorrect Answer

    Solution

    Detailed Explanation: • Statement 1: Incorrect — Fiscal deficit = Total expenditure – (Revenue + Non-debt capital receipts), not the other way around. • Statement 2: Correct — Primary deficit = Fiscal deficit – Interest payments. • Statement 3: Correct — Effective revenue deficit = Revenue deficit – Grants for capital creation, introduced to improve transparency.

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