IAS Gyan

Daily News Analysis

Fiscal deficit touches 83% of full-year target

1st August, 2020 Economy


  • The Centre’s fiscal deficit for the first three months of fiscal 2020-21 was ₹6.62 lakh crores, which is 83% of the budgeted target for the year.
  • Given the government’s additional borrowing plans, both to meet stimulus spending and bridge the revenue shortfall as a result of the pandemic, the fiscal deficit may end up as high as 8% of GDP, far exceeding the budget’s goal of 3.5%.

Fiscal Deficit definition:

  • Fiscal Deficit is the difference between the total income of the government (total taxes and non-debt capital receipts) and its total expenditure. A fiscal deficit situation occurs when the government’s expenditure exceeds its income.
  • This difference is calculated both in absolute terms and also as a percentage of the Gross Domestic Product (GDP) of the country. A recurring high fiscal deficit means that the government has been spending beyond its means.
  • The government meets the fiscal deficit by borrowing money. In a way, the total borrowing requirements of the government in a financial year is equal to the fiscal deficit in that year.