Question

State the meaning and formula of Fiscal Deficit.

Hint:

A moderate fiscal deficit can stimulate growth, but persistent high deficits may lead to increased public debt.

Answer 1

Meaning: Fiscal Deficit represents the total borrowing requirements of the government. It reflects the shortfall when the government’s total expenditure exceeds its total revenue (excluding borrowings). 
Formula: \[\text {Fiscal Deficit} = \text{Total Expenditure} - \text{(Revenue Receipts + Capital Receipts Excluding Borrowings)} \] Fiscal deficit indicates the reliance of the government on borrowings to finance its expenditure.