Give the relationship between revenue deficit and fiscal deficit.
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Give the relationship between revenue deficit and fiscal deficit.
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The relationship between revenue deficit and fiscal deficit is:

 (i) The fiscal deficit is always broader than the revenue deficit.

 (ii) The revenue deficit is defined as the difference between the government's revenue expenditure and revenue receipts. Regarding the formula: Revenue Deficit = Revenue Expenditures (RE) - Revenue Receipts (RR)

 (iii) In short, a government budget will have a revenue deficit if revenue expenditure exceeds revenue receipts.

(iv) The fiscal deficit is defined as the difference between total expenditure and total receipts net of borrowings.

 (v) Initially, the fiscal deficit does not account for all types of receipts. Borrowings are not taken into account. But, in the end, they must rely on borrowing to cover the fiscal deficit.

Fiscal Deficit = Revenue Deficit + Capital Deficit (Excluding Borrowing) - Borrowing

 = Net borrowing at home + Borrowing from RBI + Borrowing from abroad
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