Government Budget and Deficits — Part 2: Measures of Deficit: visual lesson, ISC Class 12 Economics

Lesson

Measures of Deficit

Part 2 — the revenue, fiscal and primary deficits: how to calculate them and what they tell us.

In this lesson you will

Part 2 at a glance

Concept

Each deficit compares different parts of the budget.

Table of the three deficits: the revenue deficit is revenue expenditure minus revenue receipts, the fiscal deficit is total expenditure minus revenue and non-debt capital receipts, and the primary deficit is the fiscal deficit minus interest
Deficit	Formula	What it shows
Revenue deficit	Revenue expenditure − revenue receipts	Borrowing for current spending
Fiscal deficit	Total expenditure − (revenue receipts + non-debt capital receipts)	Total borrowing requirement
Primary deficit	Fiscal deficit − interest payments	Borrowing for present programmes

Concept

Revenue deficit = revenue expenditure − revenue receipts.

It shows the government spending more than its current income on current needs.
The gap is met by borrowing or selling assets.

Revenue deficit