question_answer

Explain the meaning of the following:

(a) Revenue deficit

(b) Fiscal deficit

(c) Primary deficit

Or

Explain the following objectives of government budget:

(a) Allocation of resources

(b) Reducing income inequalities.

Answer:

(a) Revenue Deficit: A revenue deficit occurs when the net income generated, revenues less expenditures, falls short of the projected net income. This happens when the actual amount of revenue received and/or the actual amount of expenditures do not correspond with budgeted revenue and expenditure figure.

(b) Fiscal Deficit: A fiscal deficit occurs when a government?s total expenditures exceed the revenue that it generates, excluding money from borrowings. Deficit differes from debt, which is an accumulation of yearly deficits.

(c) Primary Deficit: The deficit can be measured with or without including the interest payments on the debt as expenditures. 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.

Or

(a) Allocation of Resources: Government budget helps in allocating resources efficiently resources our scarce. Thus, budget allocate resources in such a manner. So that country attains economic growth.

(b) Reducing Income inequalities: Government budget make every possible effort to reduce income inequalities. Income inequalities are so much prevalent in an economy like India.

Thus, government budget reduces income inequalities.