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BUDGET DEFICIT

  When a government spends more than it receives by the way of revenue, it is known as the budget deficit.

  The difference between revenue expenditure and revenue receipts is known as the revenue deficit.

  The difference between the government’s total expenditure and its total receipts excluding borrowing is known as the fiscal deficit.

  The growth of revenue deficit as a percentage of fiscal deficit points to a deterioration in the quality of government expenditure involving lower capital formation.

  Government deficit can be reduced by an increase in taxes or/and reduction in expenditure.

  Public debt is burdensome if it reduces the future growth in terms of output.

 

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