The Government have budgeted the fiscal deficit for 2019-20 at 3.4% of the Gross Domestic Product which is slightly higher than the target of 3.3% of GDP that the government had set itself last year.
Fiscal deficit is the amount of money that the government needs to borrow in a given year because their expenses were more than their revenues.
The deficit was expected to be higher than targeted due to a combination of revenue shortfalls and increased spending due to farmer’s income support scheme announced in the current fiscal.
The original target of achieving fiscal deficit at 3% of GDP by 2016-17 under the Fiscal Responsibility and Budget Management(FRBM)legislation has now been pushed to 2020-21.
The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) is an Act of the Parliament of India to institutionalize financial discipline, reduce India’s fiscal deficit by moving towards a balanced budget and by strengthening fiscal prudence.