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Budgetary deficit

It is the difference between total receipts and total revenue. It is the defined as the excess of total expenditure over total revenue.
 
Mathematically, it is calculated as:
 
Budgetary deficit = Total expenditure Total receipts
 
Budgetary deficit = (Revenue expenditure + Capital expenditure) (Revenue receipts + Capital receipts)
 
Where,
Capital expenditure = Loans + Advances + Capital outlay
 
Capital receipts = Recoveries + Borrowings other than through 91 day treasury bills + Other capital receipts + Sale of public assets
 
In India, budgetary deficit is increasing from plan to plan and has become a matter of great concern.

Fiscal deficit

It is over and above the budgetary deficit i.e., if borrowings and other liabilities are added to the budgetary deficit, we get fiscal deficit.
 
It is calculated as:
 
1st method: Fiscal Deficit = Budgetary deficit + Borrowings and other liabilities
 
2nd method: Fiscal Deficit = Total expenditure (Revenue receipts + Recoveries + Sale of public assets)
 
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Table 1: Calculation of budget deficit and fiscal deficit
 
Particulars (2009-2010)
(in Crores)
1. Revenue receipts
5,72,811
2. Capital receipts :
(a) Loan recoveries + other receipts
(b) Borrowings and other liabilities
4,51,676
33,194
4,18,482
3. Total receipts (1+2)
10,24,487
4. Revenue expenditure
9,11,809
5. Capital expenditure
1,12,678
6. Total expenditure (4+5)
10,24,487
7. Budgetary deficit (3-6)
Nil
8. Fiscal deficit [1+2(a)-6 ]or [ 7+2(b)]
4,18,482
 
Budget deficit = Total receipt Total expenditure
 
Budget deficit for 2009-2010 is10,24,487 crore 10,24,487 = Nil.
 
Fiscal deficit is
  • The difference between total expenditure and total revenue receipts and capital receipts, but excluding borrowings and other liabilities, Or
  • The sum of budget deficit plus borrowings and other liabilities

1st method

Fiscal deficit= the difference between total expenditure and total revenue receipts and capital receipts, but excluding borrowings and other liabilities
 
Total expenditure =10,24,487 crore
 
(-) Revenue receipt =5,72,811 crore
 
(-) Capital receipt =33,194 crore
 
Fiscal deficit =10,24,487 crore -6,06,005 crore =4,18,482 crore

2nd method

Fiscal deficit = Budgetary deficit (item 7) + Borrowings and other liabilities (item 2[b])
 
Fiscal Deficit = Nil +4,18,482 crore =4,18,482 crore.
 
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