Why does the fiscal deficit equal …
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Posted by अनुज राय 6 years, 7 months ago
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Yogita Ingle 6 years, 7 months ago
We know that fiscal deficit refers to the difference between the total budget expenditure and total budget receipts of the government, other than the borrowings and liabilities. That is,
Fiscal Deficit = Budget Expenditure – Budget Receipts (other than borrowing and liabilities)
On expanding the above equation we get,
Fiscal Deficit = (Revenue expenditure + Capital Expenditure) – (Revenue receipts + Capital receipts other than borrowings)
or, Fiscal Deficit = (Revenue expenditure + Capital Expenditure) – (Revenue receipts + Recovery of loans + Other receipts)
From this equation we can say that fiscal deficit reflects the total borrowing and other liability requirements of the government.
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