Fiscal Deficit

Fiscal deficit is the difference between the government's total expenditure and its total receipts excluding borrowings. It represents the net borrowing requirement of the government and is expressed as a percentage of GDP. A rising fiscal deficit increases the government's debt stock, can crowd out private investment, and may fuel inflation if monetised. India's fiscal deficit is classified into: Revenue Deficit (revenue expenditure minus revenue receipts), Fiscal Deficit (total expenditure minus total receipts excluding borrowings), Primary Deficit (fiscal deficit minus interest payments), and Effective Revenue Deficit (revenue deficit minus grants for capital asset creation).