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Government pegs FY2021-22 fiscal deficit at 6.8%

Fiscal deficit is an indication of the government’s borrowing to meet the shortfall between expenditure and receipts from taxes and other sources.

SNS | New Delhi |

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.

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.

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.