(a) Revenue Deficit 

The shortfall between the total revenue received to the total revenue expenditure is revenue deficit. 

Revenue deficit = Total revenue expenditure – Total revenue receipts  

This deficit only includes current income and current expenses. A high value of deficit indicates that the government should cut down on its expenditures. The government may increase its revenue receipts by increasing tax income. Disinvestment which means selling off assets is another remedial measure to reduce revenue deficit.

(b) Fiscal Deficit 

A fiscal deficit is a gap by which government’s total expenditures exceed the government’s total generated revenue. This, however, does not include the government borrowings.

Fiscal deficit = Total expenditure – Total receipts excluding borrowings

Fiscal deficit indicates the amount of money that the government will need to borrow during the financial year. A greater deficit implies more borrowing by the government and the extent of the deficit indicates the amount of expense for which the money is borrowed.

(c) Primary Deficit 

A primary deficit is the amount of money that the government needs to borrow apart from the interest payments on the previously borrowed loans.  

Primary deficit = Fiscal deficit – Interest payments on previous loans