Fiscal deficit occurs when the government’s total expenditure exceeds its total receipts, excluding borrowings. To bridge this gap, the government borrows money from domestic or external sources. Fiscal deficit is generally expressed as a percentage of gross domestic product.
A moderate fiscal deficit can support infrastructure development and economic growth. However, excessive borrowing may increase public debt and create inflationary pressure. Questions on fiscal deficit, government borrowing, and budget management frequently appear in UPSC, SSC, and banking examinations.
