The Deficit and its Types in Indian Budget

The deficit

The deficit is a budget system statement, there is a mention of four of its types

Revenue Deficit, Budget Deficit, Fiscal Deficit, and Primary Deficit

1. Revenue Deficit: Revenue deficit refers to the excess of revenue expenditure over revenue receipt. It explains one crucial fact which is what is government borrowing for. As an individual, if you are borrowing to pay your bills you are in a situation of revenue deficit. It also means while you are borrowing or spending you are not creating an asset. This also implies that there will be repayment obligation and at the same time no asset is creating.
Revenue Deficit = Total Revenue expenditure – total revenue receipts.

2. Budget Deficit: Budget Deficit refers to the excess of total expenditure over total receipts. Here, total receipts include current revenue and net internal and external capital receipts of the government.
Budget Deficit = Total expenditure – Total receipts

3. Fiscal Deficit: Fiscal Deficit refers to the difference between total expenditure on one hand and on the other hand revenue receipt plus all those capital receipts which are not in the form of borrowings.
Fiscal Deficit = Total expenditure – Total receipt (Excluding Borrowing)

4. Primary Deficit: Primary deficit refers to fiscal deficit minus interest payments. In other words, it points to how much the government is borrowing to pay for expenses other than interest payments. Also, it underlines how much the government is adding to the future burden on the basis of past and present policy.
Primary Deficit = Fiscal Deficit – Previous years borrowing interest

Budget 2019 – It is not a budget but a ‘bahi khata'(ledger)

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