The Centre on Monday said that the fiscal deficit has been pegged at 9.5% of the Gross Domestic Product for the current financial year. For the financial year of 2021-’22, the central government estimated a fiscal deficit of 6.8% of the GDP, Union Finance Minister Nirmala Sitharaman said while presenting the Budget.
Fiscal deficit is a shortfall in the central government’s income when compared with its overall expenditure. For FY21, the fiscal deficit was pegged at 3.5% in the Budget announced in February last year.
“Fiscal deficit has been pegged at 9.5% of the GDP,” Sitharaman said during her address in Parliament. “We have funded this through government borrowings, multilateral funds and short term borrowings. We need another Rs 80,000 crore for which we will approach the market in the next two months. For 2021-’22, we are estimating at a fiscal deficit of 6.8% of the GDP.”
Sitharaman said the gross borrowing from the market next year would likely be Rs 12 lakh crore. “We hope to achieve consolidation of debt by increasing buoyancy of tax revenues and increased receipts from asset monetisation,” the finance minister said, according to The Hindu.
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The Union finance minister said that the coronavirus pandemic had weakened revenue inflow while expenses had increased in an attempt to support the lower-income groups and others affected due to the outbreak. She also said that the Centre’s expenditure increased further once the health crisis was stabilised in order to boost demand.
Sitharaman added that the Centre aimed to reach under 4.5% by financial year of 2026.
During the presentation of her third Budget, Sitharaman also announced an outlay of Rs 35,000 crore for India’s coronavirus vaccination programme. She added that the Centre will make additional allocations to this fund, as and when required.
The finance ministry also proposed to increase the foreign direct investment limit in the insurance sector from the existing 49% to 74%. The Narendra Modi-led government also said it will undertake new road infrastructure projects in four states – Tamil Nadu, Kerala, Assam and West Bengal – that will go to polls this year.