Tag: fiscal deficit

The finance ministry yesterday(20 June 2022) cautioned the re-emergence of the twin deficit problem in the economy, with higher commodity prices and rising subsidy burden leading to an increase in both fiscal deficit and current account deficit. It’s also the first time the government has explicitly talked about the possibility of fiscal slippage in the current fiscal year. Read more

The GOI is likely to lay down a road map in the upcoming Budget to reduce its fiscal deficit to 4 percent of gross domestic product (GDP) by 2025-26. This is necessary because there will be demands for expansionary policies, even in the next couple of years. This implies the government is set to deviate from the long-standing medium-term target of 2.5-3 percent of GDP as prescribed by amendments to the Fiscal Responsibility and Budget Management Act (FRBM). The government had changed the recommendations of the N K Singh Committee on fiscal consolidation and targeted bringing down the fiscal deficit to 3.1 percent of GDP by 2022-23 (FY23). However, to enable widen the fiscal deficit beyond the permissible limit under the present legislation, the government may have to propose an amendment to the FRBM Act in the Finance Bill.

The latest numbers on the government’s fiscal deficit for the April-July 2020 period have exceeded the annual Budget target by 3 percent. In April-June 2020, the fiscal deficit had already risen to about 83 percent of the target for the full year. The figures on government finances are based on monthly reports released by the Controller General of Accounts (CGA). But what gets highlighted and discussed are the cumulative numbers for the latest period for which the data is released. A study of the monthly trajectory of the government’s revenues and expenditure, therefore, may present a slightly different picture, providing different takeaways for policymakers and observers of the Indian economy. Read more

The central govt has officially admitted that the fiscal deficit last year was as large as 4.6 percent of gross domestic product (GDP), much wider than the 3.8 percent provided in the Budget presented in February earlier this year. On the economy front, the provisional estimates released on Friday showed that the rate of growth in India’s GDP fell steeply to 4.2 percent in 2019-20 from 6.1 percent in 2018-19. Look at it another way, the rate of growth for India’s GDP has more than halved in just three years – from 8.2 percent recorded in 2016-17, the year of demonetization. There was no respite in 2017-18, either, when the GDP grew by only 7 percent. Read more