Calculation of revenue,fiscal and primary deficit of India.

1. Calculation of Revenue deficit, Fiscal deficit & Primary deficit of India. Lakshmi Priya I130409

2. Introduction

3. Government budget. Government Budget is an itemized accounting of the payments received by government (taxes and other fees) and the payments made by government (purchases and transfer payments). Government budget in India is reported by Ministry of Finance, Government of India.

4. Government Budget Receipts Expenditure Capital Receipts Revenue Receipts Capital exp. Revenue exp.

5. Revenue receipts & expenditure.. These are the incomes which are received by the government from all sources in its ordinary course of governance . These receipts and expenditure do not create a liability or lead to a reduction in assets.

6. Capital receipts & expenditure.. Receipts and expenditure which leads to a change in the assets or liabilities. They are obtained by the government by raising funds through borrowings, recovery of loans and disposing of assets.

7. Types. Balanced budget is when government receipts are equal to government expenditure. Surplus budget is when government receipts are more than government expenditure. Deficit budget is when government expenditure exceeds government receipts.

8. Revenue deficit. It refers to excess of revenue expenditure of the government of the government over its revenue receipts. Important, since it is related with recurring expenditure. Solved by cutting down government expenditure or increasing revenue receipts.

9. Revenue deficit = Revenue expenditure – Revenue receipts.

10. Revenue deficit= 17-1 = 1243514- 879232 = 364282 (in crore of rupees)

11. Fiscal deficit. The difference between total revenue excluding the borrowings and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government. According to John Maynard Keynes, a deficit prevents an economy from falling into recession, while another school of thought is that a country should not have fiscal deficit.

12. Fiscal deficit = Total expenditure – Total revenue (excluding borrowings)

13. Fiscal deficit = 16 – (1+5+6) = 1410372 - (879232+ 15060+ 25890 ) = 490190 (in crore of rupees)

14. Primary deficit. Primary deficit= Total revenue-Total expenditure excluding interest payments on its debt. Also, Primary deficit = Fiscal deficit - Interest payment.  Interest payment is the payment that a government makes on its borrowings to the creditors .

15. Primary deficit = Fiscal deficit – Interest payments.

16. Primary deficit = 490190 – 313170 = 177020