Budget What is Revenue Deficit and Primary Deficit? - The Financial Express
As a matter of fact, in a way, the two are a sub-parts of fiscal deficit only. While fiscal deficit is calculated as the difference between total revenue. Revenue deficit is the gap between the consumption expenditure (revenue Fiscal deficit is the difference between revenue receipts plus. A Revenue deficit is a difference between the revenue expenditure and the revenue receipts of the government treasury in a financial theory.
Higher fiscal deficit is one of the reasons for the Indian economy to have relatively higher inflation. What is revenue deficit? A mismatch in the expected revenue and expenditure can result in revenue deficit. On the contrary, if the actual receipts are higher than expected one, it is termed as revenue surplus. A revenue deficit does not mean actual loss of revenue.
But the actual revenue of Rs 90 is realised and an expenditure is Rs This translates into net revenue of Rs 20, which is Rs 5 lesser than the budgeted net revenue and called as revenue deficit. What is the current scenario in India? To revive the economy, the government has announced several stimulus packages. This has led to a hike in the fiscal deficit.
The interim budget has also proposed an expenditure of Rscrore.
Difference between Revenue Deficit and Fiscal Deficit
The Reserve Bank of India recently said that the fiscal deficit might touch 5. This turns into a deficit of Rs 3,54,crore from an initial expectation of Rs 1,50, crore. The government is expected to lose Rs 36, crore due to a cut in taxes. Finance Minister Arun Jaitley is all set to announce Budget — the most important annual economic document for the country.
Budget is the last regular budget of Modi government and is being considered as the most challenging one.
Fiscal & revenue deficit
A number of announcements are likely to take place in the budget which will affect the common man. Two important things to be understood are — Revenue Deficit and Primary Deficit. What is Revenue Deficit and Primary Deficit?
While people have a fair understanding of Fiscal Deficit, they are usually confused with terms Primary and Revenue deficit.
Before Budgetit is important to understand the two terms. As a matter of fact, in a way, the two are a sub-parts of fiscal deficit only.
Fiscal & revenue deficit - The Economic Times
While fiscal deficit is calculated as the difference between total revenue and expenditure, the primary deficit can be arrived by deducting interest paid on the borrowings from the fiscal deficit. So the amount should ideally not form a part of entire spending made by the government for developmental works.
Read What is Money Bill? Revenue deficit is a result of a mismatch between expected revenue and expenditure. On the other hand, if the actual receipts are higher than projected by the government, the situation is termed as revenue surplus.