- Revenue Deficit:
- Difference between government’s revenue expenditure and revenue receipts.
- Formula: Revenue Deficit = Revenue Expenditure - Revenue Receipts.
- Implies current expenses exceed current revenues.
- Fiscal Deficit:
- Difference between government’s total expenditure and total receipts except borrowings.
- Formula: Fiscal Deficit = Total Expenditure - Total Receipts (excluding borrowing).
- Also equals total borrowing of the government.
- Key indicator of government’s financial health.
- Primary Deficit:
- Fiscal Deficit minus net interest liabilities.
- Formula: Primary Deficit = Fiscal Deficit - Net interest liabilities.
- Measures deficit excluding interest payments on previous debt.
- Focuses on present fiscal imbalances.
| Feature | Revenue Deficit | Fiscal Deficit | Primary Deficit |
|---|---|---|---|
| Definition | Rev Exp - Rev Rec | Total Exp - Total Rec (excl. borrowing) | Fiscal Deficit - Net Interest Liabilities |
| Indicates | Current expenses > current revenues | Total borrowing of the government | Present fiscal imbalances (excluding past debt service) |
| Significance | Government using savings for consumption | Key indicator of financial health/stability | Focus on current year’s policy choices |