Fiscal Deficit

The Fiscal Deficit is the gap between a government's total expenditure and its total revenue (excluding borrowings) in a given financial year. It represents the amount the government needs to borrow from the market to fund its spending beyond what it collects through taxes and other non-debt receipts. In India, the fiscal deficit is expressed as a percentage of GDP and is a key metric for assessing government finances. The Union Budget, presented in February each year, outlines the government's fiscal deficit target. A high or widening fiscal deficit can crowd out private investment by competing for available credit, push up bond yields, and create inflationary pressure — all of which are closely monitored by bond markets, rating agencies, and equity investors in India.