Budget Deficits

The Budgetary deficits are being often discussed in various economic and financial forums. It has impact on Government spending and hence overall wellbeing of the citizens are affected due to these deficits. Let us understand the meaning of commonly used deficit terms.

There are 3 main budgetary deficits:

Fiscal Deficit

Primary Deficit

Revenue Deficit

To understand these common deficits, we must be clear on 2 concepts i.e Revenue receipts/expenditure and Capital receipts/expenditure.

Revenue Receipts/Expenditure:

The receipts and expenditures that are in the nature of day-to-day operations are covered under this.

Capital Receipts/Expenditure:

The receipts and expenditures that are long term in nature and are used for many years are covered under this.

Examples:

Tax Receipts	Revenue receipts
Interest expenditure	Revenue expenditure
Debt receipts	Capital receipts
Grants for creation of Capital Assets	Capital expenditure

Fiscal Deficit:

Fiscal deficit can be understood as the difference between total expenditure and total receipt excluding borrowings. In other words, borrowings fill up the gap created by fiscal deficit.

Fiscal deficit = Total expenditure – Total Revenue (excluding borrowings)

Primary Deficit:

If we deduct the interest payments from the fiscal deficit, it gives Primary Deficit.

Primary Deficit = Fiscal Deficit – Interest payments

Revenue Deficit:

The shortfall of Revenue receipts to Revenue expenditure is referred as Revenue Deficit or difference between revenue expenditure and revenue receipt.

Revenue Deficit = Total Revenue expenditure – Total Revenue receipts

All these 3 types of deficits reflect the health of the financial system of the country.

Please see Budget at a glance of Union of India to understand these deficits more precisely.

बजट का सार Budget at a Glance
						(In ₹ crore)
			2023-2024वास्तववक Actuals	2024-2025बजट अनुमान BudgetEstimates	2024-2025संशोधित अनुमान RevisedEstimates	2025-2026बजट अनुमान BudgetEstimates
1. राजस्व प्राप्तियां	1. Revenue Receipts		2729036	3129200	3087960	3420409
2. कर राजस्व(केंद्र को प्तनवल)	2. Tax Revenue (Net to Centre) 1		2327251	2583499	2556960	2837409
3. कर भिन्न राजस्व	3. Non-Tax Revenue		401785	545701	531000	583000
4. पं जी प्राप्तियां	4. Capital Receipts		1714411	1691312	1628527	1644936
5. ऋणों की वस ली	5. Recovery of Loans		26646	28000	26000	29000
6.  अन्य     प्राप्तियां	6. Other Receipts		33122	50000	33000	47000
7. उिार और अन्य देयताएं	7. Borrowings and Other Liabilities 2		1654643	1613312	1569527	1568936
8. कुल प्राप्तियां (1+4)	8. Total Receipts (1+4)		4443447	4820512	4716487	5065345
9. कुल व्यय (10+13)	9. Total Expenditure(10+13)		4443447	4820512	4716487	5065345
10. राजस्व    खातेपर	10. On Revenue Account		3494252	3709401	3698058	3944255
जजसमें से	of which
11. ब्याज िुगतान	11. Interest Payments		1063872	1162940	1137940	1276338
12. पं जी खाते के सृजन हेतु सहायता अनुदान	12. Grants in Aid for creation of CapitalAssets		303916	390778	299891	427192
13. पं जी खाते पर	13. On Capital Account		949195	1111111	1018429	1121090
14. प्रिावी पं जी व्यय (12+13)	14. Effective CapitalExpenditure (12+13)		1253111	1501889	1318320	1548282
15. राजस्व घाटा (10-1)	15. Revenue Deficit		765216	580201	610098	523846
	(10-1)		(2.6)	(1.8)	(1.9)	(1.5)
16. प्रिावी राजस्व घाटा(15-12)	16. Effective RevenueDeficit (15-12)		461300(1.6)	189423(0.6)	310207(1.0)	96654(0.3)
17. राजकोषीय घाटा[9-(1+5+6)]	17. Fiscal Deficit[9-(1+5+6)]		1654643(5.6)	1613312(4.9)	1569527(4.8)	1568936(4.4)
18. प्राथभमक घाटा (17-11)	18. Primary Deficit		590771	450372	431587	292598
	(17-11)		(2.0)	(1.4)	(1.3)	(0.8)

Source: https://www.indiabudget.gov.in/