ho does fiscal deficit  reflects the total borroing and liability requirement of government .please explain clearly and with the help of example

Fiscal deficit refers to the difference between the total budget expenditure and total budget receipts of the government, other than the borrowings and liabilities. That is,

Fiscal Deficit = Budget Expenditure – Budget Receipts (other than borrowing and liabilities)

or, Fiscal Deficit = (Revenue expenditure + Capital Expenditure) – (Revenue receipts + Capital receipts other than borrowings)

or, Fiscal Deficit = (Revenue expenditure + Capital Expenditure) – (Revenue receipts + Recovery of loans + Other receipts)

The excess of budgetary expenditure over budgetary receipts is the amount that is financed by government borrowings and liabilities. This amount is calculated by estimating the fiscal deficit. Therefore, we can say that fiscal deficit reflects the total borrowing and other liability requirements of the government.

For example, If the budget expenditure is 5000 crore, budget receipts are 4000 crore then ,
Fiscal deficit = 5000 - 4000 = 1000 crore
The excess of budget expenditure over budget receipts is 1000 crore. This amount will be financed by government borrowings and liability requirements of government. Hence, fiscal deficit reflects the total borrowing and other liability requirements of the government.
 

  • 0
Fiscal Deficit=Estmated  Total government expenditure(revenue expenditure +capital expenditure)-total receipt of government(Revenue receipt +capital receipt) excluding borrowing. Suppose  government  revenue expenditure Rs .7,000 . capital expenditure 13,000 and revenue receipt 8,000 Capital receipt 10,000 by sell of own rights of properties.In this situation total expenditure (7,000+13,000)=20,000-Total receipt (8000+10,000) 18,000 , so government's fiscal deficit  is Rs 2000   and to meet out  these defict government has to make a plan to take loan Rs 2,000. again receipt Rs 2,000 as loan comes into catergaries of capital receipt  that why fiscal deficit= borrowing (loan) fiscal deficit is Rs 2,000 and borrowing also Rs 2000
Or total receipt--borrowig  (excluding borrowings)20,000-2000=18,000
  • 0
Fiscal Deficit=Estmated  Total government expenditure(revenue expenditure +capital expenditure)-total receipt of government(Revenue receipt +capital receipt) excluding borrowing. Suppose  government  revenue expenditure Rs .7,000 . capital expenditure 13,000 and revenue receipt 8,000 Capital receipt 10,000 by sell of own rights of properties.In this situation total expenditure (7,000+13,000)=20,000-Total receipt (8000+10,000) 18,000 , so government's fiscal deficit  is Rs 2000   and to meet out  these defict government has to make a plan to take loan Rs 2,000. again receipt Rs 2,000 as loan comes into catergaries of capital receipt  that why fiscal deficit= borrowing (loan) fiscal deficit is Rs 2,000 and borrowing also Rs 2000
Or total receipt--borrowig  (excluding borrowings)20,000-2000=18,000
  • 0
What are you looking for?