MEASURES OF GOVT.

BUDGET DEFICIT
Budgetary deficit is defined as the excess of total estimated expenditure over total estimated revenue. They are 3 type :
1. Revenue Deficit
2. Fiscal Deficit
3. Primary Deficit
Budget deficit
Budget deficit is the excess of revenue expenditure over revenue receipts during the given Fiscal, year.
Revenue deficit= Revenue expenditure – Revenue Receipts

 When the government spends more than it collects, it creates a budgetary deficit with reference to the budget of
parliamentary
 Revenue deficit means government revenue doesn't cover department spending.

IMPLICATIONS OF REVENUE DEFICIT

1. It shows that the government won't be able to meet its regular and recurring costs with the suggested budget.
2. It means that the government is "dis-saving," which means that it is using savings.
3. It also means that the government has to make up for this shortfall by borrowing money or selling assets.
4. When capital receipts are used to pay for extra spending on consumption, the economy experiences rising costs.

Fiscal Deficit
A fiscal deficit occurs when a government's total expenditures are more than the revenue that it generates, excluding money from
borrowings.
Fiscal Deficit= Total Expenditure- Total Receipts(excluding borrowings)
Therefore, Fiscal Deficit = Borrowings, the total borrowings requirements of the government.
Overcoming this Fiscal Deficit
1. Borrowings: To make up for a fiscal imbalance, the government can borrow from internal sources or external sources.
2. Deficit Financing Reserve Bank Of The State can lend money to the government against its own securities to cover the budget
gap.
These increase the financial burden.
Primary deficit
It indicates how much of the government borrowings are going to meet expenditures. It indicates interest payments.
Primary deficit = Fiscal Deficit – Interest Payments
Interest payments on past borrowings have greatly increased the fiscal deficit.
To reduce this deficit, interest payments should be repaid as early as possible.
Revenue expenditure Capital Expenditure Budget deficit Fiscal Deficit Primary deficit

refers to the refers to the Budget deficit is the A fiscal deficit occurs It indicates how much of
expenditure which expenditure which excess of revenue when a government's the government
neither creates any either creates an asset expenditure over total expenditures are borrowings are going to
asset nor causes a or cause a reduction in revenue receipts during more than the revenue meet expenditures. It
indicates interest
reduction in any liability the liabilities of the the given Fiscal, year. that it generates,
payments.
of the government government. It is non- excluding money from
recurring in nature. borrowings

Revenue deficit= Fiscal Deficit= Total Primary deficit = Fiscal

Revenue expenditure – Expenditure- Total Deficit – Interest
Revenue Receipts Receipts(excluding Payments
borrowings)

Therefore, Fiscal Deficit

= Borrowings