Budget in Minute: What is fiscal deficit? Anil Singhvi explains
When the government spends more than it earns then this gap that is created is called fiscal Deficit
The first thing that the markets react on during Budget presentation are the Fiscal Deficit numbers
When any Finance Minister starts the Budget Speech, the first thing that is read are the Fiscal deficit numbers. Everybody keeps and eye on Fiscal Deficit.... Why? What is Fiscal Deficit? Zee Business Managing Editor Anil Singhvi explains.
Fiscal Deficit is the gap between the earnings of the government through taxes and other means and its expenditure. When the government spends more than it earns then this gap that is created is called Fiscal Deficit.
— Zee Business (@ZeeBusiness) January 15, 2020
However, the government makes up for the loss through different ways, like borrowing or from international investors, by issuing bonds or securities. But what is the problem with these ways? It is not bad to have a fiscal deficit and government makes budget that would lead to fiscal deficit. But it is important to keep that deficit within the limit.
In the last Budget that the Finance Minister Nirmala Sitharaman had presented she said that the fiscal deficit would be 3.3% of the Indian GDP. If the deficit is around that mark it is okay. If there is too much fiscal deficit level above that number, it is not acceptable to the markets.
So, do keep an eye on Fiscal Deficit numbers in Budget 2020, too.
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