How is 'Fiscal Deficit' defined in the context of Indian public finance management?

💡 Solution & Explanation

Fiscal deficit measures the total borrowing requirement of the government, calculated as the excess of total expenditure—both revenue and capital—over total non-debt receipts, which include tax revenues, non-tax revenues, and recovery of loans. It indicates the extent to which the government must borrow from the market or central bank to finance its operations. Revenue deficit measures only the shortfall in current operating accounts. Managing fiscal deficit is a key objective under the Fiscal Responsibility and Budget Management Act.