Jargons we keep hearing

There are quite a few words we keep hearing , but may not have cared to dig deep to what do these words mean

Deficit:
A situation in which liabilities exceed assets, expenditures exceed income, losses exceed profits is known as deficit

Fiscal Deficit:
Situation in which a government's total expenditures exceed the revenue that it generates is called Fiscal Deficit. In India, our government always has a Fiscal Deficit and this short fall is cover by government borrowings , disinvestment of PSUs , etc

This year the Fiscal Deficit , could be lower because of the huge amount of money made by our government from 3G auction

Current Account Deficit :
when a country's total imports of goods, services and transfers is greater than the country's total export of goods, services and transfers. This situation makes a country a net debtor to the rest of the world.this is called running a Current Account Deficit.

Usually in trade negotiations between two countries , Current Account Deficit is a major concern for the debtor that is tried to be addressed . Every country in the world today, including USA runs a Current Account Deficit with China , which means , every country in the world imports more from China , then they export to China .

Monetary Policy:
The actions of Reserve Bank of India , that determine the size and rate of growth of the money supply which in turn affects interest rates is known as Monetary Policy. If the money supply is too loose inflation will be high and if it is too tight then economic growth is affected. So in most cases Monetary Policy is a juggling act to balance growth and control Inflation/Price.

In India, RBI does this by tweaking a whole set of parameters like CRR,SLR,Repo, Reverse Repo , etc  
what to know about these terms click here

Fiscal Policy
Government policies that influence macroeconomic conditions. These policies affect Tax Rates, Foreign Direct Investments , Government Spendings, etc . In case of India , Annual Budget is a time when major Fiscal Policy directions are spelt out by the government.

Image : FreeDigitalPhotos.net,Photographer: Jeroen van Oostrom