Spending more than income is something any individual, firm or country would want to avoid, but in reality expenditure by governments exceeds revenues while financing growth. A fiscal deficit is the difference between the earnings and the expenses of a country, and is the opposite of a budget surplus, which countries achieve by collecting more than they spend. In case of India, the fiscal deficit further increased to Rs 11.91 lakh crore in 10 months of FY23, which is 67.8 per cent of the Rs 17.55 lakh crore limit set by the government.
This is a jump for the fiscal deficit from the same period in FY22, when the difference between expenses and income had hit 58.9 per cent of the target. The surge comes despite a revision of the upper limit for the fiscal deficit from Rs 16.61 lakh crore to Rs 17.55 lakh crore.
Tax revenue of Rs 16.89 lakh crore in the 10 month period is 80.9 per cent of FY23's target, compared to 87.7 per cent of the target achieved in the same period of FY22. While the tax collection for the period is lower compared to the previous fiscal year, expenditure went up marginally from 74.5 per cent to 75.7 per cent of the targeted levels.
The government which seeks to restrict fiscal deficit at 6.4 per cent of the GDP in FY23, has set a target to bring it down to 5.9 per cent of the GDP in FY24. During the year, India had also clocked a budget surplus in July 2022, which was the first in more than two years.
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