In February 2021, Sitharaman said that the government would now aim to lower the fiscal deficit target to 4.5 per cent of GDP only by 2025-26 (April-March).
With the pandemic dealing a body blow to economic growth and hence the government’s revenue streams, the centre was compelled to rewrite its earlier fiscal targets, under which the Budget deficit was projected to ease to 3.1 per cent of GDP by the next financial year. We expect revenue collection to be high, despite the government’s decision to cut excise duty on retail fuel products in early November,” economists from Standard Chartered Bank wrote. “Revenue collection has been robust we expect it to exceed the budgeted target by 0.3-0.5 per cent of GDP on strong tax collection, higher dividend inflows and partial success in meeting divestment targets. The consensus view in the market is that the government will comfortably achieve the fiscal deficit target of 6.8 per cent of GDP set for the current financial year because of healthy tax collections and a higher-than-expected growth in nominal GDP. The poll includes fiscal deficit projections of nine entities, including leading brokerages and banks. NEW DELHI: When Finance Minister Nirmala Sitharaman details the Union Budget for the next financial year on February 1, one of the most keenly awaited announcements will be the fiscal deficit that the government is aiming for as the degree of spending the centre plans is key to ensuring a sustainable revival from the scars of the COVID-19 pandemic.Įven as increased government expenditure is seen as a necessary condition for the economy to firmly regain its footing, the Indian equity market would find reason for cheer if the government were to rein in its fiscal deficit target at 6.25 per cent of GDP in 2022-23 (Apr-Mar), according to the median of an ETMarkets poll.
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