What's the difference between revenue deficit, fiscal deficit, budgetary deficit and primary...

Question:

What's the difference between revenue deficit, fiscal deficit, budgetary deficit and primary deficit?

Deficit:

Deficit arises when there is an excess of expenses over revenue. The deficit is considered as an issue in the economy that arises due to trade and foreign trade. There are many types of deficit that can arise due to this shortage.

Answer and Explanation:

The different types of deficits are fundamentally different from each other, as can be seen below:

1) Revenue deficit - It is the difference between the total expenditure of the government and the total receipts, where the total expenditure exceeds the revenue and induces the government to borrow or take loans.

2) Fiscal deficit - The fiscal deficit shows the excessive total expenditure over total revenue. This deficit type excludes borrowing, unlike revenue deficits that are inclusive of borrowing.

3) Budgetary deficit - It is the excess of expenses over receipts. Budget deficit includes borrowings and other form of liabilities, unlike fiscal deficit where other liabilities are not considered.

4) Primary deficit - Primary deficit can be attained if the interest payments on debt are deducted from the amount of fiscal deficit. This is not the same as revenue and fiscal deficit where no considerations regarding the interest payments have been made.


Learn more about this topic:

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Achieving Trade Balance: Trade Deficit and Surplus Examples

from Economics 102: Macroeconomics

Chapter 14 / Lesson 6
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