â€“In 2007-2008, government revenue from tax and elsewhere totaled 5.4 trillion rupees while total expenses were 7.1 trillion rupees, a shortfall of 1.7 trillion rupees. That was covered by 1.3 trillion rupees in government borrowings and other receipts. So the government overspent its income by one third and financed about one fifth of its expenditure through borrowing. â€“Fast forward to 2011-2012. Revenue = 7.7. trillion. Expenses = 13.2 trillion. Shortfall = 5.2 trillion. The gap was funded largely by 4.4 trillion in borrowing. So the government borrows almost two thirds of what it earns and one third of what it spends. The fiscal deficit now amounts to about 68% of revenue. Indiaâ€™s Economic Crisis by the Numbers - India Real Time - WSJ GOI has in a manner of speaking done something similar to China... China too created massive and convoluted internal debt pile to fund its investments ... thats where the similarities end...Indian government spent the internal debt on socialist dole schemes and subsidies ,while china spent it in infra.. so ours is a bigger mess ,because the internal debt has not been used for anything and is being repaid by taking more debt. Government spending money means that little is left for others...the savings/investment of private sector as a % of GDP have continually come down in the last 3 years.. In 2007 pvt sector savings +investment stood at 25% of GDP..While in 2010 it was only 15% gdp...2011 data when it comes out promises to be even worse.. But people are able to eat three times a day. So it is all good.