What is Fiscal Deficit?
Fiscal deficit is the gap between what the government spends and what it earns from taxes and non-debt revenues — showing how much the government needs to borrow.
Formula
Fiscal Deficit = Total Expenditure - Total Revenue (excluding borrowings)
How to Interpret
High fiscal deficit (>5% of GDP) may lead to higher interest rates, crowding out private investment. Markets react to budget deficit announcements.
Typical Ranges
India target: below 4.5% of GDP. Lower is fiscally healthier.