ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Calculating the Fiscal Deficit

Calculating the Fiscal Deficit R J Mody SHOULD any capital receipt be taken into account in the calculation of fiscal deficit is an important question that I S Gulati attempts to answer (Economic and Political Weekly, May 21). To quote, "Strictly interpreted, since fiscal deficit is the excess of total government expenditure, i e, expenditure on revenue and capital account taken together over government's current revenues, no item of receipts on capital account should be allowed for the calculation of fiscal deficit."1 The factremains, however, that when the two items of capital receipts Gulati confines himself to are taken into account, it implies a lower fiscal deficit than that calculated on the basis of the above definition. Thus fiscal deficit is equal to total government expenditure minus the sum of the receipts on current account and the above capital receipts.

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