- The difference between total revenue and total expenditure of the government is termed as fiscal deficit.
- It is an indication of the total borrowings needed by the government.
- While calculating the total revenue, borrowings are not included.
- Generally, fiscal deficit takes place due to either revenue deficit or a major hike in capital expenditure.
- A deficit is usually financed through borrowing from either the Central Bank of the country or raising money from capital markets by issuing different instruments like treasury bills and bonds.
- A mismatch in the expected revenue and expenditure can result in revenue deficit.
- Revenue deficit arises when the government’s actual net receipts is lower than the projected receipts.
- A revenue deficit does not mean actual loss of revenue.
Thursday, November 19, 2009
Fiscal Deficit
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