Which of the following equations correctly defines the 'Fiscal Deficit' of the Government of India?
- Total Revenue Receipts - Total Revenue Expenditure
- Total Expenditure - (Revenue Receipts + Non-debt Capital Receipts)
- Fiscal Deficit - Interest Payments
- Total Capital Receipts - Total Capital Expenditure
Answer: Total Expenditure - (Revenue Receipts + Non-debt Capital Receipts)
Fiscal Deficit represents the total borrowing requirement of the government. It is calculated by subtracting all receipts that do not create a liability (Revenue Receipts like taxes, plus Non-debt Capital Receipts like disinvestment or loan recoveries) from the Total Expenditure. The resulting shortfall must be financed entirely through fresh borrowings (issuing bonds) or drawing down cash balances.