Prajna Capital - An Investment Guide

Fiscal Deficit The government is taking a lot of flak these days for the 16-year high fiscal deficit in the current fiscal year. Here’s how it is: The government’s ‘non-borrowed receipts’ — revenue receipts plus loan repayments received by the government plus miscellaneous capital receipts, primarily divestment proceeds — fall short of its expenditure. The excess of total expenditure over total non-borrowed receipts is called ‘fiscal deficit’. The government then has to borrow money from the people to meet the shortfall. Revenue Deficit Revenue deficit is an important control indicator. All expenditure on revenue account should ideally be met from receipts on revenue account. Ideally revenue deficit should be zero, else the government will be in debt. Primary Deficit This is a key indicator. When it shrinks, it indicates we are not doing too badly on fiscal health. The primary deficit is fiscal deficit minus interest payments the government makes on its earlier borrowings. Deficit And ...