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Fiscal Deficit: This is the most commonly used term and represents the difference between the government’s total expenditure and its total receipts (excluding borrowings). It indicates the total amount the government needs to borrow to finance its spending.
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Budgetary Deficit: This term is often used synonymously with the fiscal deficit. It represents the difference between the government’s estimated expenditure and estimated receipts for a specific fiscal year, as presented in the budget.
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Net Fiscal Deficit: This is the fiscal deficit minus net lending of the Central Government. Net lending refers to loans and advances made by the government to state governments, public sector undertakings, and other entities. So, the net fiscal deficit represents the amount the government needs to borrow from the market.
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Primary Deficit: This is the fiscal deficit minus interest payments. It reflects the government’s current fiscal stance, excluding the burden of past borrowings. A lower primary deficit suggests the government is making progress in improving its fiscal health.
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Monetized Deficit: This refers to the portion of the fiscal deficit that is financed by the central bank through the creation of new money. This can be inflationary if not carefully managed. It’s worth noting that many countries, including India, have moved away from direct monetization of deficits.