What Is a Deficit?

A deficit arises when costs exceed income, imports outweigh exports, or liabilities exceed assets in financial terms. A deficit is the inverse of a surplus and is defined as a shortfall or loss. When a government, corporation, or individual spends more than it gets in a certain time, generally a year, a deficit occurs.
Running a deficit will diminish any present surplus or add to any existing debt load, regardless of whether the situation is personal, corporate, or governmental. As a result, many individuals feel that deficits cannot be sustained in the long run.
Fiscal deficits, on the other hand, according to the famed British economist John Maynard Keynes, allow governments to acquire products and services that might assist revive their economies, making deficits a helpful tool for pulling countries out of recessions. Proponents of trade deficits argue that they allow nations to acquire more products than they produce at least temporarily and that they may also encourage domestic sectors to become more globally competitive.
Opponents of trade deficits, on the other hand, believe that they harm the domestic economy and citizens by providing employment to foreign nations rather than generating them at home. Many people also believe that governments should not run fiscal deficits on a regular basis since the expense of repaying the debt diverts resources that could be used for more productive purposes, such as education, housing, or public infrastructure.

Deficit means a shortfall.

A budget deficit means that the budgeted expenditure exceeds revenue projections.

A trade deficit means that imports exceed exports.

The current account balance of a country is calculated by deducting imports from exports and adding net cash transfers. If the value is positive we call it a surplus. If it is negative we call it current account deficit.