FISCAL DEFICIT
- October 30, 2020
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Subject: Economics
Context: The fiscal deficit continued to soar in September to reach ₹9.1 lakh crore, or almost 115% of the budget target of ₹7.96 lakh crore for 2020-21, as per data from Controller General of Accounts.
Concept:
- It is the gap between the government’s expenditure requirements and its receipts. This equals the money the government needs to borrow during the year. A surplus arises if receipts are more than expenditure.
- Fiscal Deficit = Total expenditure – (Revenue receipts + Non-debt creating capital receipts).
- It indicates the total borrowing requirements of the government from all sources.
- From the financing side: Gross fiscal deficit = Net borrowing at home + Borrowing from RBI + Borrowing from abroad
- The gross fiscal deficit is a key variable in judging the financial health of the public sector and the stability of the economy.