Budget 2025: Here is how revenue, fiscal and primary deficit impacts the Indian economy
Revenue Deficit:
The shortage of enough funds with government to maintain its day-to-day affairs is known as revenue deficit. This happens when total revenue expenditure crosses total revenue receipts, leading to a revenue deficit. To work through the revenue deficit, the government typically resorts to borrowing, divestments, and may also introduce new taxes or raise existing ones to bridge the gap in revenue.
Fiscal Deficit
When the Centre spends more money than it receives, the negative balance is known as fiscal deficit. The number is one of the most important figure that is observed during the Budget. The size of the deficit may affect growth, price stability, cost of production, and inflation. Additionally, in case of high fiscal deficit, a country's rating is also impacted.
On the other hand, when there is an increase in the fiscal deficit, there is a boost to a sluggish economy by giving more money to people who can then buy and invest more.
In the first Budget of Modi 3.0 after Lok Sabha polls, the fiscal deficit was estimated at 4.9 per cent of GDP.
Primary Deficit:
A primary deficit indicates the government's borrowing requirements to cover interest payments. A declining primary deficit signals an improvement in the fiscal health of the economy.
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