India ran a fiscal deficit of 4.6% of the GDP against the planned 3.5% in 2019-20. What exactly is fiscal deficit, how does it affect you and what do these figures mean?
The recent significant rise in the fiscal deficit was because the govt ended up with gross tax revenue (the sum of total direct taxes and indirect taxes) of 20.1 lakh crore against the revised estimate of 21.63 lakh crore – a gap of more than 1.5 lakh crore. Given the lockdown and shutting down of most businesses during the lockdown amid coronavirus pandemic, the current financial year 2020-21 is also expected to go the same way.
Deespshikha Sharma explains in the following video:
In the current scenario , it looks like citizens will have to bear the cost of falling tax revenues and a higher fiscal deficit.