Union Budget 2019: How to understand gross budgetary support and fiscal deficit better

[hq]How to understand gross budgetary support?[/hq] [hans][hstep]The government’s support for the Central Plan is called the gross budgetary support (GBS). This is an important component of the Central Plan of the government. Budgetary support is earmarked for meeting the planned outlays of the central government in a financial year. The GBS includes the tax receipts and other sources of revenue raised by the government. [caption id=“attachment_6013191” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] The Central Plan includes the GBS and the spending of the public enterprises that do not figure in the Budget.[hans][hstep] In FY19, Indian Railways spent the entire earmarked GBS of Rs 53,060 crore. It is not unusual for the finance ministry to cut the actual GBS from the Budget Estimate (BE) level; for instance, in FY18, the GBS was cut by around Rs 10,000 crore from BE. [hq]How to understand fiscal deficit?[/hq] [hans][hstep]The fiscal deficit is the difference between the government’s total revenue and total expenditure. It is an indication of the total borrowings required by the government. This is an important parameter to gauge the government’s overall performance and the sustainability of growth in the future. Deficit differs from debt, which is an accumulation of yearly deficits. A fiscal deficit is regarded by some as a positive economic event. A government cannot ignore the rise in fiscal deficit beyond a level as it will create a serious impact on the economy.[hans][hstep]