India’s fiscal deficit in the first eight months of the current fiscal year further exceeded from the annual target of Rs 7.04 lakh crore. The fiscal deficit rose to Rs 8.07 lakh crore till November, on the back of higher spending and lower revenue collection, according to the Ministry of Finance. With the current figure, the fiscal deficit has now reached 114.8 per cent of the government’s budget estimate for this financial year. The government has received nearly Rs 10 lakh crore, which is 48.6 per cent of the annual target, while it incurred an expenditure of Rs 18 lakh crore, which is 65.3 per cent of the annual target.
The country’s fiscal deficit stood at Rs 7.17 lakh crore in the same period of the previous fiscal. Typically, the fiscal deficit figures get back to a decent shape in the last quarter of the financial year when the tax revenue gets a boost. However, amid low tax collections in the current fiscal year and the government’s move to cut the corporate tax, it may make it difficult for the government to achieve the goal.
Fiscal Deficit is the difference between the total expenditure of the government and its overall income that includes total taxes and non-debt capital receipts. A fiscal deficit occurs when the government’s spending goes beyond its means. This year, a major slowdown in the economic growth of India has pushed the government to announce a slew of fiscal measures that are also likely to adversely impact the government’s ability to keep its expenditure in a limit. Even a low consumption in the domestic market has also hit indirect tax collection in the form of GST.
