It is difference between Total Govt Expenditure and total receipts excluding borrowings
Hence, in this case
We take total expenditure (both Revenue and Capital)
We take total Receipts (both Revenue and capital) but we do not include Capital Receipts which create debt (loan)
Capital Receipts normally include following:
Recovery of loan given by Central Govt to State govt etc
Sale Proceeds from Disinvestment (Amt Received from sale of shares of PSU)
Loan taken by Central Govt (from RBI, Outside country, Public)
In this case, first 2 are called Non Debt Creating Capital Receipts
(We take them while calculating Fiscal Deficit)
And last one is called Debt Creating Capital Receipt
(We exclude it while calculating Fiscal Deficit)
‘The fiscal deficit gives the borrowing requirement of the government’.
Fiscal Deficit is the difference between Govt Total Expenditure and total receipts excluding borrowings
That is, when total government expenditure is greater that total government receipts, the government faces fiscal deficit.
Fiscal Deficit = Total Expenditure - Total Receipts(Borrowings excluded)
Fiscal Deficit = Total Expenditure (revenue + capital) − Total Receipts (excluding borrowings).
It gives an indication to the government about the total borrowing requirements from all sources.
Greater fiscal deficit implies greater borrowings by the government.
Give the relationship between the revenue deficit and the fiscal deficit.View Answer
- Fiscal Deficit is the difference between Govt Total Expenditure and total receipts excluding borrowings
- Revenue Deficit is excess of Revenue expenditure over Revenue Receipts
- Fiscal Deficit is a broad term and includes Revenue Deficit.
In the following questions, select the correct answers:
Borrowings are equivalent to:
- Revenue Deficit
- Fiscal Deficit
- Primary Deficit
- None of these
B. Fiscal Deficit
In a government budget, revenue deficit is Rs50,000 crores and borrowings are Rs75,000 crores.
The fiscal deficit will be:
- Rs25,000 crores
- Rs 75,000 crores
- Rs 1,25,000 crores
- Rs 50,000 crores
B. Rs 75,000 crores
Fiscal Deficit is equal to borrowings.
Which of the following statement is not true for fiscal deficit?
A. fiscal deficit:
- represents the borrowings of the government
- is the difference between total expenditure and total receipts of the government
- is the difference between total expenditure and total receipts other than borrowings
- increases the future liability of the government
B. is the difference between total expenditure and total receipts of the government
Fiscal deficit is the difference between total expenditure and total receipts other than borrowings and not just total receipts.
Which of the following statements is true?
- Government Borrowings from the World Bank is a Revenue Receipt.
- Higher fiscal deficit is the result of higher revenue deficit.
- The loans taken by government represents a situation of fiscal deficit.
- The excess of capital receipts over the revenue receipts is called Revenue deficit.
C. The loans taken by government represents a situation of fiscal deficit.
Fiscal deficit is defined as the amount of borrowing the government has to resort to meet its expenses.
Assertion (A): Fiscal deficit is the difference between primary deficit and interest payment.
Reason (R): Fiscal deficit is the sum total of primary deficit and interest payment.
Mark the correct choice:
- Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).
- Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).
- Assertion (A) is true, but Reason (R) is false.
- Assertion (A) is false, but Reason (R) is true.
D. Assertion (A) is false, but Reason (R) is true.
Fiscal Deficit refers to the excess of total expenditure over total receipts excluding borrowings.
It indicates borrowing requirements of the government.
Read the news report given below and answer the questions that follow:
The Finance Minister Nirmala Sitharaman has proposed a sharp 34.5 per cent hike in capital expenditure to Rs5.54 lakh crore in financial year 2022 in order to push growth.
The massive increase comes at a time when the country is looking to recover from the Covid pandemic, as rising government spending is key to bringing the economy back on track.
The government will also provide an additional Rs2 lakh crore to states for capital expenditure over and above its own commitment.
We will also work out specific mechanism to nudge states to spend more of their Budget on creation of infrastructure, Ms. Sitharaman said.
The finance minister said that the government will launch a national asset monetisation pipeline which includes the sale of oil and gas pipelines, power transmission lines and operation of toll roads under the National Highway Authority of India.
This year's budget, according to the government, rests on six pillars: health and well-being, physical and financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and research and development, and "minimum government, maximum governance," the finance minister had asserted
And capital expenditure is an important component that drives the growth. - "Budget 2021: Finance Minister Proposes Sharp 34.5%25 Hike in Capital Expenditure." - NDTV Budget 2021 - February 01, 2021
Why has the Finance ministry hiked the Capital Expenditure?
- To recover from the Covid-19 pandemic
- To bring the economy back on track
- Both (A) and (B)
- Neither (A) nor (B)
C. Both (A) and (B)
_______________ is an important component that drives the growth.
- Capital Expenditure
- Revenue Expenditure
- Capital Receipts
- Revenue Receipts
A. Capital Expenditure
Capital expenditure is the money spent by the government on the development of machinery, equipme
Which objective of the Government Budget does the increase in capital expenditure serve?
- Encouragement of economic growth
- Stability in the economy
- Generation of employment
- All of the above
D. All of the above
What problem can the increase in this Capital Expenditure create?
- Fiscal Deficit
- Revenue Deficit .
- Primary Deficit
- Budgetary Deficit
A. Fiscal Deficit
Fiscal deficit takes place either due to revenue deficit or a major hike in capital expenditure