An important term: The fiscal deficit

Fiscal deficit is the excess in expenditure over the total non-borrowed receipts of the government in a financial year. It is an indication of the borrowing required by the government, and is usually funded by borrowing from the public.

A fiscal deficit is either caused due to a revenue deficit (actual revenues less the budgeted estimates) or due to excessive expenditure by the government. The calculation takes all of government's expenditure into account, and all the government's revenue and non-debt capital income. The fiscal deficit is expressed as an absolute monetary value, but in common parlance is often expressed as a percentage of Gross Domestic Product (GDP).

The current fiscal deficit target for this financial year (FY22) is 6.8% of GDP

Also Read: BOOM FAQ #4: What Is Fiscal Deficit?