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What is Fiscal, Revenue and Current account Deficit?
What is fiscal deficit?
The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government. While calculating the total revenue, borrowings are not included. Generally fiscal deficit takes place due to either revenue deficit or a major hike in capital expenditure. Capital expenditure is incurred to create long-term assets such as factories, buildings and other development.

A deficit is usually financed through borrowing from either the central bank of the country or raising money from capital markets by issuing different instruments like treasury bills and bonds.
What is Revenue Deficit?
A mismatch in the expected revenue and expenditure can result in revenue deficit. Revenue deficit arises when the government’s actual net receipts is lower than the projected receipts. On the contrary, if the actual receipts are higher than expected one, it is termed as revenue surplus. A revenue deficit does not mean actual loss of revenue.

Let’s take a example, if a country expects a revenue receipt of Rs 100 and expenditure worth Rs 75, it can result in net revenue of Rs 25. But the actual revenue of Rs 90 is realised and expenditure is Rs 70. This translates into net revenue of Rs 20, which is Rs 5 lesser than the budgeted net revenue and called as revenue deficit.
What is Current account Deficit (CAD)?
The meaning of current account deficit means the value of imports of goods / services / investment income is greater than the value of exports. In other words value of import is greater than value of export goods. It is also called as a trade deficit.
What is Primary deficit?
The primary deficit is defined as the difference between current government spending on goods and services and total current revenue from all types of taxes net of transfer payments.
The deficit can be measured with or without including the interest payments on the debt as expenditures.
Latest Related news
January-March current account deficit narrows to 0.1% of GDP
India's current account deficit (CAD) or difference between the country's imports of goods and services and its exports, has narrowed in the fourth quarter of the fiscal year ended 2016 to the lowest in at least three years.

Reserve Bank of India (RBI) data released on Thursday showed that the current account deficit had shrunk to $ 0.3 billion in the first quarter ended March 2016 down from $0.7 billion year earlier and sharply lower from $7.1 billion recorded in third quarter of the last fiscal.

"The contraction in CAD was primarily on account of a lower trade deficit ($24.8 billion) than in Q4 of last year ($31.6 billion) and $34 billion in the preceding quarter," RBI said.

Exports as well as imports fell resulting in a lower trade deficit. The current account deficit for the full fiscal year end March 2016 narrowed to 1.1% of GDP down from 1.8% of GDP in 2014-15.

Exports dropped to $266.4 billion in fiscal March 2016 from $316.5 billion in March 2015, while imports dropped to $396.4 billion from $461.5 billion in the year ended March 2015.
31 May 2016
Government achieves 3.9 pc fiscal deficit target in 2015-16
16 June 2016
Government today said it has achieved the fiscal deficit target of 3.9 per cent of GDP in 2015-16.

Fiscal deficit is 3.9 per cent of GDP or Rs 5.32 lakh crore in 2015-16," the Controller General of Accounts (CGA) said while releasing the provisional accounts for the last financial year.

For 2016-17, the government aims to further bring down the fiscal deficit -- the gap between expenditure and revenue -- to 3.5 per cent.

The CGA further said revenue deficit during the last fiscal was 2.5 per cent of GDP.

As per the provisional data, the fiscal deficit in April was Rs 1.37 lakh crore, which is 25.7 per cent of the Budget estimate as against 23 per cent a year ago.

The fiscal deficit for the whole year is estimated at Rs 5.33 lakh crore.

Total expenditure of the government in April was Rs 1.61 lakh crore, or 8.2 per cent of the full-year estimate.

Of the total expenditure, Plan spending was Rs 45,543 crore while for non-Plan, it was Rs 1,16,442 crore.

Revenue collection was Rs 22,075 crore, or 1.6 per cent, of the estimate.

Total receipts of the government -- from revenue and non-debt capital -- in April stood at Rs 24,659 crore.

Revenue deficit refers to the shortfall in total government revenue realisation from the targeted figure.
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April-May fiscal deficit at 43% of Budget Estimation
1 July 2016
In April, first month of this financial year, it was 25.7% of the year's budgeted amount, compared to 23% in the same month of 2015

The central government’s fiscal deficit for the first two months of the current financial year (April & May) was 42.9 per cent of the Budget Estimate (BE) for 2016-17, despite slowing of capital expenditure.

In the corresponding period of 2015-16, it was 37.5 per cent of BE for that year. In April, first month of this financial year, it was 25.7 per cent of the year’s budgeted amount, compared to 23 per cent in the same month of 2015. The data was released by the Controller General of Accounts, a day after the Cabinet cleared recommendations of the 7th Pay Commission to pay 23.5 per cent more, on average, for 10 million government employees and pensioners. This will have some impact on the fiscal deficit for this year. The recommendations will reflect in the July salary for employees, to be paid in August.
More specifically, the salary impact would hit the revenue deficit portion of the fiscal deficit. This gap between non-capital expenditure and receipts touched 56.2 per cent of the BE in these first two months; a year before, it was 43.8 per cent.

In absolute terms, the fiscal deficit touched Rs 2.28 lakh crore by end-May, against Rs 2.08 lakh crore in the corresponding period of the previous year.

The fiscal deficit for all of 2016-17 has been budgeted at Rs 5.34 lakh crore, about 3.5 per cent of gross domestic product (GDP). The government’s capital expenditure declined almost 12 per cent to Rs 33,231 crore in April-May, against Rs 37,743 crore in the corresponding period of the earlier financial year. On the other hand, revenue expenditure was up 17.6 per cent, to Rs 2.64 lakh crore in these first two months, compared to Rs 2.25 lakh crore earlier.

This expenditure will go up due to the Pay Commission’s recommendations.
However, total receipts rose 27.4 per cent to Rs 69,060 crore, against Rs 54,207 crore in the first two months of the previous year.  The tax kitty rose to Rs 49,690 crore, more than double the Rs 19,889 crore in the same months of 2015.

Non-debt capital receipts, including disinvestment, yielded only Rs 3,369 crore but was higher by 82.5 per cent, compared to Rs 1,846 crore in the first two months of 2015-16. Disinvestments are supposed to yield total revenue of Rs 56,500 crore this year.

Non-tax revenue was Rs 16,601 lakh crore, almost half of last year’s Rs 32,472 crore. The government’s aim is a fiscal deficit at 3.5 per cent of GDP this year, compared to 3.9 per cent in 2015-16. The revenue deficit is targeted to come down to 2.3 per cent of GDP, against 2.5 per cent in 2015-16.