Fiscal Deficit

• 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.