It is the mark by which a resource

falls a short of a mark

Difference between cash inflow and
outflow
Opposite of surplus
Revenue deficit Projected net income – Realized net income

Budgetary deficit Total expenditure - Total receipts

Fiscal deficit Total expenditure - Total capital and revenue receipts

(Budgetary deficit + borrowings and other liabilities)

Primary deficit Fiscal deficit -Interest payment

 Revenue

A fiscal deficit occurs when a

government's total expenditures
exceed total revenue receipts
and capital receipt, excluding Expense
borrowings
Receipts
Revenue receipts Capital receipts
Tax, dividend, Disinvestment, Sale
of share

Total receipts
Expenditure
Revenue Expenditure Capital Expenditure
Subsidies, salaries, Infrastructure,
interest on loan payment of loan

Total Expenditure
 HOW TO CALCULAE FISCAL DEFICIT
Example
• If the Government earns Rs.
100 crores in a year, but spends
120 crores, and GDP 1,000
Crores find fiscal deficit
• Fiscal deficit = (Expense-
Receipts )/GDP*100
=(120-100)/1000*100
=2% of GDP
Generally fiscal deficit takes place either due to revenue deficit or a major hike in capital
expenditure
 interest

Implications of borrowing Higher taxes

from market or from
central bank
principle
amount

Increase pressure on
future generation
Implications of Printing of new currency
05 Low profit

04 High interest rate

03 Inflation

02 Increase supply of money

01 More currency printing

 Implication on Business

01 02 03 04

More money in Less disposable High interest rate Low profit

bank income available
Why India has fiscal deficit

Investment Capital expenditure

India is a developing nation . To India has a maximum expenditure
increase GDP person it need to Providing capital in naure of revenue, I need money
spend more To provide capital to industries o to spend on its infrastructure
provide employment
Benefits
1 Boost aggregate demand

2 Increase output

3 Employment

4 Helps in Recession
 Fiscal deficit
5%
4%
4%
3%
3%
2%
2%
1%
1%
0%
2015 2016 2017 2018 2019
Fiscal deficit 4% 3.90% 3.50% 3.50% 3.30%

year GDP estimation

2018-19 3.3%
 To reduce fiscal deficit FRBMC was found in 2003
2019-20 3.1%
(FRBMC- fiscal responsibility and budget management
committee)
2029-21 3%
 Fiscal deficit 2017-18

Total expenditure = 21.47 lakh crore (BE)

22.18 lakh crore (RE)

Revenue expenditure = 18.37 lakh crore(BE) Revenue Receipts =

19.44 lakh crore (RE) 15.16 lakh crore (BE)
15.03 lakh crore (RE)

Capital expenditure = Capital Receipts = 72,500 crore (BE)

3.1 lakh crore (BE) 1,00,000 crore (RE)
2.74 lakh crore (RE)

Total Receipts = 15.88 lakh crore (BE)

16.03 lakh crore (RE)
2018-19 FISICAL DEFICIT
Disinvestment stand at
8,760 crore

Capital expenditure is up
by 27% and revenue by
29%

till 31s t July fiscal deficit at

68.7% of budgeted target

Key FRBMC wanted gov. to

3.1% in 2018-19
points
Firs time, target set for
Cap. Receipt t has crossed
 Cutting down gov.
expenses
Improve gov.
investment

Improving distribution
system

Raising petroleum prices

and imported goods