Q22 of 38 Page 1

(a) Distinguish between revenue receipts and capital receipts of the government.

(b) Do ‘disinvestment’ and ‘loan proceeds from abroad’ constitute revenue receipts of the government? Give reason.


OR


Given the following data estimate the values of (i) Revenue deficit, and (ii) Fiscal deficit :



A.



B. No, disinvestment’ and ‘loan proceeds from abroad do not constitute revenue receipts of the government due to the following reasons:


● Disinvestments are capital receipt as it leads to a reduction in the assets.


● Loans proceeds from abroad are also capital receipt as it increases the liabilities of the government.


OR


Revenue deficit: Total revenue expenditure-Total revenue reciept


= Total revenue expenditure - (Tax revenue +non tax revenue)


= 1500- (1000+500)


= 1500+1500


= Rs 3000 crore


Fiscal deficit = Total expenditure-(Revenue receipt+Disinvestment proceeds)


= (1500+480) + (1000+150+50)


= RS780 crore


More from this chapter

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20 A

Note: The following question is for the Visually Impaired Candidates only, in lieu of Q. No. 20 :

What is meant by the inflationary gap? Suggest any two fiscal measures to correct the situation of the inflationary gap.


 21

State which of the following statements are true or false. Give valid reasons.

(a) According to the Keynesian theory of employment, the state of full employment is obtained only when the economy is in equilibrium.


(b) In a two-sector economy, if consumption is equal to income, the average propensity to save will be zero.


 23

Explain the process of money creation by a commercial bank using a hypothetical numerical example.

 24

Given the following data, find the values of ‘Government Final Consumption Expenditure’ and ‘Mixed Income of Self-Employed’ :