Fiscal deficit

Government expenditure less revenue, excluding borrowing, usually expressed as a percentage of output.

A deficit of ₹17 lakh crore against ₹320 lakh crore of output is 5.3%.

The deficit has to be financed, and how it is financed determines its effect. Borrowing domestically absorbs savings that could have funded private investment; borrowing abroad creates currency exposure; monetising it creates inflation.

For a company analyst the relevance is through interest rates and through government capital spending, which drives whole sectors in India.

For an equity analyst the number matters through two channels. Government borrowing sets the supply of sovereign paper, which anchors the yield curve and therefore every discount rate. And government capital spending drives whole Indian sectors: cement, construction, capital goods and defence read the budget's capital-expenditure line the way a consumer company reads rural income.