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Fiscal deficit exceeds full - year target
Why is it in the news ?
- As per the official data released, the government’s fiscal deficit for April-October period stood at Rs 6.48 lakh crore, or 103.9% of the full-year target of Rs 6.24 lakh crore.
- The fiscal deficit in the first seven months of the financial year exceeded the budgeted target for the entire year.
More in the news
- The fiscal deficit, which is the gap between expenditure and revenue, was at 96.1% of the Budget Estimates (BE) during the same period last year.
- While expenditure continues to grow, total receipts in October 2018 shrank from October 2017.
- Analysts expect that the government will breach its fiscal deficit target of 3.3 per cent of GDP by March-end 2019.
- However, the Finance Ministry has so far maintained that it is confident of meeting the fiscal deficit target.
- The growth rate of eight infrastructure sectors slowed to 4.8% in October due to contraction in the production of crude oil, natural gas and fertilizers.
Fiscal deficit
- Fiscal deficit indicate the excess of government expenditure over receipts except borrowing.i.e. Fiscal deficit = Total Expenditure – Total Receipts except borrowings.
- Fiscal deficit represents the total borrowing requirements of the central government.
- Most importantly, fiscal deficit indicate the financial health of the budget and that of the government.
- Higher fiscal deficit thus becomes a matter of concern. On the other hand, a manageable fiscal deficit is a welcome sign.
Source
The Hindu.