Fiscal deficit
The Economic Survey urged for strong measures to control the fiscal deficit. India risks losing its investment-grade sovereign rating if it fails to get its finances into shape.
The fiscal deficit target is 4.1% of GDP this fiscal. The finance minister has targeted a drop to 3.6% of GDP the following fiscal year and 3% of GDP for FY17. The expectation was that the finance minister would change the target to a more realistic goal from the current 4.1%.
The fiscal deficit is the difference between the total expenditure of the government in a year and the revenue receipts and the recoveries of loans. What this means is that the government will have to borrow to bridge the gap between income and expenditure. Finance Minister Arun Jaitley is widely expected to revise the fiscal deficit target for the current financial year upwards from the 4.1% target (of GDP).
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