Context: The central government managed to meet the fiscal deficit target of 4.8% of the GDP for 2024-25, according to the provisional data released by the Controller General of Accounts.
Relevance of the Topic: Prelims: Fiscal Deficit- Concept and Key Trends.
What is Fiscal Deficit?
- Fiscal deficit is the difference between the government's total expenditure and its total receipts excluding borrowing.
- Fiscal deficit arises due to either increase in expenditure or shortfall in revenues.
- Fiscal deficit can be financed through:
- issuing new currency or printing money
- borrowing from the central bank (RBI)
- borrowing from domestic markets (via instruments like treasury bills and bonds).
- borrowing from foreign sources.
Govt meets 4.8% Fiscal Deficit target for 2024-25
- Fiscal Deficit target (FY 2024-25): Budget 2024-25 had a fiscal deficit target at 4.4% of GDP. The revised estimates (RE) had a fiscal deficit target at 4.8% of GDP.
- The central government managed to meet the fiscal deficit target of 4.8% of the GDP. The fiscal deficit stood at Rs 15.77 lakh crore, or 100.5% of the revised annual target. The target was met due to:
- High dividend from RBI (Rs 2.11 lakh crore in FY24)
- Robust direct tax collection (witnessed a robust growth of ~15.6% )
- Controlled revenue deficit
- Expenditure management in subsidies and capital expenditure.
Also Read: Fiscal Deficit