With lower-than-expected tax collections projected in the ongoing financial year, India’s finance minister Nirmala Sitharaman had little room to keep fiscal deficit in check.
Presenting her second budget in the parliament, Sitharaman said, the government’s fiscal deficit for 2019-20 will be 3.8% of the gross domestic product (GDP). That is a slippage of 0.5 percentage points.
In her first budget, in July 2019, Sitharaman had sought to limit the fiscal deficit, the difference between the government’s expenditure and revenues, to 3.3% of GDP.
Tabling the Economic Survey yesterday (Jan. 31), the finance minister projected growth for financial year 2021 at 6% to 6.5%. This is down from an earlier projection of 7%, made by the chief economic advisor KV Subramanian in July 2019. The pre-budget survey retained the growth rate for the current fiscal at 5%.
Put together by a team headed by Subramanian, the Econonmic Survey focused on the need to relax the fiscal deficit for the current fiscal to revive economic growth.