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Distinguish Between Revenue Deficit and Fiscal Deficit. - Economics

Distinguish between revenue deficit and fiscal deficit.

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Solution

Basis of Difference Revenue Deficit Fiscal Deficit
1. Meaning Excess of revenue expenditure of the government over its revenue receipts. Excess of the total budget expenditure over total budget receipts net of borrowings
2. Significance The regular receipts of the government are not enough to meet its regular expenditures The borrowings of the government, i.e. the debt capital receipts of the government
3. Formula Revenue deficit = Revenue expenditure − Revenue receipts

Fiscal deficit = Total budget expenditure − (Total budget receipts − borrowings)

i.e. Fiscal deficit = Borrowings

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