Fiscal deficit refers to the shortfall between the government’s total expenditure and its total revenue (excluding borrowings) in a given financial year. It indicates how much the government needs to borrow to meet its expenses when revenues fall short. In the Indian context, a high fiscal deficit can have both positive and negative effects on the economy. On the one hand, fiscal deficits can stimulate economic growth if the borrowed funds are invested in productive infrastructure or social programs. On the other hand, persistent or high fiscal deficits can lead to increased public debt, higher interest payments, inflationary pressures, and reduced investor confidence. It may also crowd out private investment as government borrowing can raise interest rates in the economy. Therefore, managing the fiscal deficit is crucial for maintaining economic stability, ensuring fiscal sustainability, and supporting long-term growth.