What is the difference between fiscal deficit & revenue deficit?
Asked by raghavan pvv, 16 Jun '07 09:45 am
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Revenue Deficit: When the net amount received (revenues less expenditures) falls short of the projected net amount to be received. This occurs when the actual amount of revenue received and/or the actual amount of expenditures do not correspond with predicted revenue and expenditure figures. This is the opposite of a revenue surplus, which occurs when the actual amount exceeds the projected amount. Fiscal Deficit: 1.When a government's total expenditures exceed the revenue that it generates (excluding money from borrowings). Deficit differs from debt, which is an accumulation of yearly deficits. A fiscal deficit is regarded by some as a positive economic event. For example, economist John Maynard Keynes believed that deficits help countries climb out of economic recession. On the other hand, fiscal conservatives feel that governments should avoid deficits in favor of a balanced budget policy. 2. The fiscal deficit is the difference between the government's total expen ...moreAnswered by ramachandra mahale, 16 Jun '07 03:50 pm
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Fiscal Deficit = If Total Expenditure (made by govt in one financial year) is more then Total Revenue receipts (Income received by govt in one financial year in form of TAX, Excise Duty) is called Fiscal Deficit. Total Expenditure = Revenue Expenditure + Capital Expenditure. Hence, Fiscal deficit = Total Expenditure - Revenue Receipt And, Revenue Deficit = Revenue Expenditure - Revenue Receipt Revenue deficit is always bad, but fiscal deficit can be good. Revenue Expenditure financed through loan is not economically justified because interest payable on the loan and it does not give any financial return. Hence, its a potential Debt trap Where as Capital Expenditure financed through loans is not necessarily bad. Its depends on how govt will spend its capital. If govt is spending toward the creation of assets and growth, its good for ecomomy. It will improves business climate and private investment will increase which will lead to economic growth. Revenue Expe ...moreAnswered by Santanu Sarkar, 09 Sep '08 10:50 pm