Question

Can there be a fiscal deficit in a government budget without a revenue deficit? Explain.

Answer 1

1. Yes, there can be a fiscal deficit in government budget without any revenue deficit.

2. Revenue deficit is a position where total revenue expenditure of the government exceeds its total revenue receipts.

3. Fiscal deficit is a position where total expenditure of the government exceeds sum total of its revenue receipts and non-debt capital receipts.

4. Hence, there can be a fiscal deficit without revenue deficit in following situations:

(i) When capital budget shows a deficit and revenue budget is balanced.

(ii) When deficit in capital budget is greater than surplus in revenue budget.