The revised annual estimate for the fiscal deficit in the vote-on-account budget on February 1, was at Rs 17.35 lakh crore for the full financial year 2023-24.

The decline in the fiscal deficit, despite an increase in the government’s expenditure on big ticket infrastructure projects to spur economic growth, was due to higher tax receipts and an increase in non-tax revenue.

The government's capital expenditure rose to Rs 8.06 lakh crore in April-February which works out to 84.8 per cent of the revised annual estimate, compared to the corresponding figure of Rs 5.90 lakh crore in the same period of the previous financial year.

The Finance Ministry aims to reduce the fiscal deficit -- the difference between the government’s income and expenditure -- to 5.8 per cent of gross domestic product during 2023-24, from 6.4 per cent in the previous fiscal year.

A lower fiscal deficit reflects stronger macroeconomic fundamentals as it also means that the government will need to borrow less which leaves more money in the banking system to lend to corporates for investment. This in turns fuels growth and creates more employment. A smaller fiscal deficit also helps to keep inflation in check.