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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