If you are new to finance and investment, huge terms like deficit, finance, trade etc. can be mind boggling. These are actually simple terms which you need to know and these will help you make wise decisions while you are planning to invest your hard earned money.
Fiscal deficit, in simple terms means that the government is spending more than it is able to earn. It is similar to your house hold finance. If you spend more than you earn, you will land yourself in debt. The same implies to our government as well.
The government earns its money through the taxes that you and I pay as citizens of the country. This is considered the earnings of the government. This money should be more than what we actually spend as a country. If we spend within this limit, then it would be an idealistic situation. But in general, in a country like India, we are not able to meet our expenditure within our source of income. This is putting the country to a deficit – called the fiscal deficit.