Notes on economic implications of fiscal deficit

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Fiscal deficit, these days, is widely used as a budgetary tool for explaining and understanding budgetary developments in India. The significance of this concept has increased considerably in view of the fact that now budgetary deficit is not covered through printing more notes.

No doubt, revenue deficit also explains the budgetary situation but it is a narrow concept since it relates to revenue expenditure and revenue receipts only.

(i) Meaning:

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Fiscal deficit is equal to the excess of total expenditure over the sum of revenue and capital receipts excluding borrowing.

In Short:

Fiscal Deficit = Total Budget Expenditure (–) (Revenue Receipt + Capital Receipts Excluding Borrowing)

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