Types of Deficit

Explanation

Classification Of Budget

Budget

Receipt Expenditure

Receipt

Revenue Receipt Capital Receipt

• Neither decrease in Asset • Either increase in liability

• Nor increase in Liability • Or reduce in Asset

Tax Non Tax Includes

• Penalty / Fine • Loan Received
• PSU profit • Disinvestment
• Interest Received
• Grant Received
• Dividend
• Escheat Property
Expenditure
Revenue Expenditure Capital Expenditure
Neither increase in asset Either Increase In Asset
nor reduce in Liability Or reduce in Libility
• Pension • Loan Given to other
• Interest Given to Other • Asset creation
• Grant Given to other
• Subsidies

Types Of Deficit

Revenue Deficit = Revenue Expenditure – Revenue Receipt

Fiscal Deficit = Total Expenditure – Total Non Borrowing Receipt
Primary Deficit = Fiscal Deficit – interest Payment to Other
Effective Revenue Deficit = Revenue Deficit – Grant Given to states
Q1. Which of the following is the definition of a budget deficit?

A. Excess of the total expenditure over the total receipts minus interest payments
and borrowings
B. Excess of the total expenditure over the total receipts minus borrowings
C. Excess of the revenue expenditure over the revenue receipts
D. Excess of the total expenditure over the total receipts

Q2. Which of the following is a development that can occur as a result of

deficit financing?

A. The rise in inflation within the Indian economy

B. The improvement in money supply in the Indian economy
C. The increase in government debt
D. All of the above

Q3. What can be said about the fiscal deficit?

A. Interest payments
B. Borrowings
C. Borrowings minus interest payments
D. Interest payments minus borrowings

Q4. What is referred to as a primary deficit?

A. Interest payments
B. Borrowings
C. Both interest payments and borrowings
D. Borrowings minus interest payments