1. Calculation of
Revenue deficit, Fiscal deficit & Primary
deficit
of India.
Lakshmi Priya
I130409

2. Introduction

3. Government budget.
 Government Budget is an itemized
accounting of the payments received by
government (taxes and other fees) and
the payments made by government
(purchases and transfer payments).
 Government budget in India is reported
by Ministry of Finance, Government of
India.

4. Government Budget
Receipts Expenditure
Capital Receipts
Revenue Receipts
Capital exp.
Revenue exp.

5. Revenue receipts &
expenditure..
o These are the incomes which are received by the government
from all sources in its ordinary course of governance.
o These receipts and expenditure do not create a liability or
lead to a reduction in assets.

6. Capital receipts &
expenditure..
 Receipts and expenditure which leads to
a change in the assets or liabilities.
 They are obtained by the government by
raising funds through borrowings, recovery
of loans and disposing of assets.

7. Types.
 Balanced budget is when government
receipts are equal to government
expenditure.
 Surplus budget is when government
receipts are more than government
expenditure.
 Deficit budget is when government
expenditure exceeds government
receipts.

8. Revenue deficit.
 It refers to excess of revenue expenditure
of the government of the government
over its revenue receipts.
 Important, since it is related with recurring
expenditure.
 Solved by cutting down government
expenditure or increasing revenue
receipts.

9.  Revenue deficit = Revenue expenditure –
Revenue receipts.

10. Revenue deficit= 17-1 = 1243514-879232
= 364282 (in crore of rupees)

11. Fiscal deficit.
 The difference between total revenue
excluding the borrowings and total
expenditure of the government is termed as
fiscal deficit.
 It is an indication of the total borrowings
needed by the government.
 According to John Maynard Keynes, a deficit
prevents an economy from falling into
recession, while another school of thought is
that a country should not have fiscal deficit.

12. Fiscal deficit = Total expenditure – Total revenue (excluding
borrowings)

13. Fiscal deficit = 16 – (1+5+6) = 1410372 - (879232+15060+25890)
= 490190 (in crore of rupees)

14. Primary deficit.
 Primary deficit= Total revenue-Total
expenditure excluding interest payments
on its debt.
 Also, Primary deficit = Fiscal deficit -
Interest payment.
 Interest payment is the payment that a
government makes on its borrowings to
the creditors.

15. Primary deficit = Fiscal deficit – Interest payments.

16. Primary deficit = 490190 – 313170
= 177020