Fiscal Deficit:

Fiscal deficit is the difference between the government's total expenditure and its total receipts (excluding borrowings) during a specific financial year. When the government's total expenditure exceeds its total receipts, it results in a fiscal deficit.

Borrowings and other liabilities:

Borrowings and other liabilities refer to the money that the government borrows from various sources to finance its expenditure. These sources include domestic and foreign banks, financial institutions, and individuals.

Relation between borrowings and fiscal deficit:

When borrowings and other liabilities are reduced from the budget deficit, we get the fiscal deficit. This is because borrowings form a significant part of the government's total receipts. Therefore, reducing borrowings from the budget deficit gives us the government's total receipts, which can then be compared with the total expenditure to calculate the fiscal deficit.

Other deficits:

The other deficits that are commonly used to measure the government's financial position include:

1. Revenue deficit - It is the difference between the government's revenue receipts and revenue expenditure.

2. Primary deficit - It is the fiscal deficit minus the interest payments on the government's borrowings.

3. Capital deficit - It is the difference between the government's capital receipts and capital expenditure.

Conclusion:

In conclusion, the reduction of borrowings and other liabilities from the budget deficit gives us the fiscal deficit, which is a measure of the government's total expenditure minus its total receipts (excluding borrowings).