Question

Long answer type questions:
Discuss the meaning of following deficits: (i) Revenue Deficit; (ii) Fiscal Deficit; and (iii) Primary Deficit.

Answer 1

Revenue deficit is related to revenue receipts and revenue expenditure of the government. Revenue deficit is the excess of revenue expenditure over revenue receipts. It does not include items of capital expenditure and capital receipts.

A fiscal deficit refers to a situation when total expenditure exceeds the total receipts. Thus, fiscal deficit is estimated as the difference between total expenditure and total receipts of the government.

Primary deficit is the difference between fiscal deficit and interest payments.