The Economic Survey has projected the overall fiscal deficit at 5.8 per cent, including the centre and the state. The central government's share on this is expected to be 3.4 for 2018-19.
Fiscal deficit is nothing but the difference between total revenue and total expenditure of the government. It is an indication of the total borrowings needed by the government.
Over the years, the government has tried to reduce the fiscal deficit, especially at the central government level. Former Finance Minister, Arun Jaitley has kept the number sacrosanct over the years.
It would be interesting to see the target levels of the fiscal deficit set by Finance Minister, Nirmala Sitharaman in the coming financial year 2019-20. A number above 3.4 per cent may not inspire confidence in analysts and economists alike.
The government faces a strange predicament of reducing the fiscal deficit, as well as propelling growth. On the one hand if it pushes for growth, the deficit moves higher.
In the last few years, one must admit that Former Finance Minister, Arun Jaitley has controlled the fiscal deficit very well. However, the problem this time is that the tax receipts will be very subdued, as economic growth has slowed down considerably. This could possibly be a constraint for the government in its spending programme.