Fiscal Deficit in January at 12

Prelims level : Economy Mains level : Government Budgeting.
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In News:

  • According to official data, Fiscal deficit widened in January to Rs. 7.7 lakh crore, or 121.5% of the Budget Estimates for the full year.


  • The fiscal deficit stood at Rs. 7 lakh crores in the April-December 2018 period, which was 112.4% of the full year target. Last year, the fiscal deficit in the April to January period was at 113.7% of the full year target. The fiscal deficit figure works out to 5.5% of GDP for the year as per the first advance estimate released by the government in January, the latest data available.
  • According to government that the fiscal deficit would come to 3.4% of GDP in 2018-19, marginally higher than the targeted 3.3%
  • The government’s total receipts were at Rs. 12.30 lakh crore in the April to January period, which is 67.5% of the target for the year. This figure was 71.7% of the budget estimate during the same period in the previous year.
  • Within this, the government’s total tax receipts stood at Rs. 10.2 lakh crore in the April to January period or 68.7% of the budgeted target for the full year, with just two months left in the financial year. The total expenditure during the period was Rs. 20 lakh crore, which is 81.5% of the budgeted target for the full year.

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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