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

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