April – Dec Fiscal Deficit at 112.4% of Budget Target

Prelims level : Economy Mains level : Indian Economy and issues relating to planning, mobilization, of resources, growth, Development and Employment.
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In News:

  • The fiscal deficit for the period April-December 2018 has touched 112.4% of the budget target of Rs. 6.24 lakh crore for the financial year 2018-19, data from the Controller General of Accounts (CGA) shows.


  • In absolute figures, the fiscal deficit was at Rs. 7.01 lakh crore during April-December of this financial year. The situation, however, is marginally better than last year, where the fiscal deficit at the end of December 2017 was 113.6% of that year’s budget estimate.
  • The government has budgeted to cut the fiscal deficit to 3.3 percent of GDP or Rs 6.24 lakh crore in 2018-19, from 3.53 percent in the previous financial year. In the interim budget for 2019-20, the fiscal deficit was revised upwards marginally to 3.4 percent of GDP or over Rs 6.34 lakh crore, on account of additional outlay of Rs 20,000 crore for funding income scheme for small farmer
  • Tax revenue was 2 per cent of BE, compared with 73.4 per cent in the comparable period of the previous year.
  • According to the CGA data, the total expenditure of the government at December-end was Rs 18.32 lakh crore or 75 percent of BE.
  • The total expenditure for current fiscal has been raised to Rs 24.57 lakh crore in the Revised Estimates, from the budgeted Rs 24.42 lakh crore.

What is Fiscal Deficit?

  • The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government. While calculating the total revenue, borrowings are not included.

FRBM Target:

  • The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in 2003 which set targets for the government to reduce fiscal deficits. The targets were put off several times. In May 2016, the government set up a committee under NK Singh to review the FRBM Act.
  • The government believed the targets were too rigid. The committee recommended that the government should target a fiscal deficit of 3 per cent of the GDP in years up to March 31, 2020 cut it to 2.8 per cent in 2020-21 and to 2.5 per cent in 2020-21 and to 2.5 per cent by 2023.
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