Fiscal deficit is an indication of the government’s borrowing to meet the shortfall between expenditure and receipts from taxes and other sources.
The deficit had soared to a high of 4.6 per cent of the GDP in 2019-20, mainly due to poor revenue realisation. (Photo: AFP)
Finance Minister Nirmala Sitaraman on Monday said India’s fiscal deficit for FY2020-21 settled at 9.5 per cent and targeted at 6.8 per cent in the next fiscal year.
The estimations of fiscal deficit for the FY2021-22 are based on the rise in expenditure on account of the outbreak of COVID-19 and moderation in revenue during this fiscal year.
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The lockdown to check the spread of virus adversely impacted the economic activities resulting in contraction in the economy by an estimated 7.7 per cent.
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The government in the ongoing fiscal year had pegged the fiscal deficit at 3.5 per cent before the coronavirus pandemic hit Indian economy.
While unveiling the Budget 2021-22 in the Lok Sabha, the Finance Minister said, the government proposes to bring down the fiscal deficit below 4.5 per cent of GDP by 2025-26.
Fiscal deficit is an indication of the government’s borrowing to meet the shortfall between expenditure and receipts from taxes and other sources.
The deficit had soared to a high of 4.6 per cent of the GDP in 2019-20, mainly due to poor revenue realisation.
She added that the government plans to borrow Rs 80,000 crore during the residual two months of the current fiscal year.
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