FISCAL DEFICIT AND CALCULATION

How to calculate Fiscal Deficit? What is Fiscal Deficit? Fiscal Deficit is nothing but the difference between the money spent by the Government and the total income earned. Now,you can come to an idea that if the country has a fiscal deficit, then still the Government is not rich enough. How to calculate Fiscal Deficit? Let us consider the following example, If the Government earns Rs. 100 crores in a year, but spends 120 crores, then the Fiscal Deficit of the country is 20 crores. I guess, you can understand how to calculate the Fiscal deficit, by now. But as a matter of fact, Fiscal Deficit is usually not expressed in amount, rather in terms of percentage of GDP. So therefore lesser the Fiscal Deficit percentage, better is the country's growth. Now you have another doubt, i.e What is GDP? GDP is nothing but gross domestic product (GDP) or gross domestic income (GDI) and this is the term used to measure the country's overall economics output. You can calculate the GDP , with the help of this formula, GDP = consumption + investment + Government spending + (exports-imports) So, if we know the value of GDP, and the Fiscal value ( difference between expenditure and earnings), we can easily express the Fiscal Deficit in terms of GDP Reference http://factsdatabase.blogspot.com/2010/02/how-to-calculate-fiscal-deficit.html

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