In the Union Budget 2021-22, Finance Minister Nirmala Sitharaman has pegged fiscal deficit for 2021-22 at 6.8% of GDP. The government aims to bring it below 4.5% by 2025-26. For 2020-21, the original fiscal deficit target was 3.5%.
The Union Budget for FY 2021-22 - Fiscal Deficit Target Revised
Union Finance Minister Nirmala Sitharaman in her budget speech said that the government is looking to achieve a fiscal deficit of 6.8% of GDP for 2021-22. She added that they intend to reach a fiscal deficit level of below 4.5% by 2025-26 by increasing the buoyancy of tax revenue through improved compliance and increased receipts from monetization of assets which includes public sector enterprises and land.
Other Highlights of Fiscal Deficit in the Union Budget
- The budget estimates for expenditures in 2021-22 is set at Rs.34.83 lakh crores to to ensure economy is given the required push.
- Rs.5.54 lakh crore will be used as capital expenditure.
- Compared to the budget estimates figure of 2020-21, capital expenditure sees an increase of 34.5%.
- Gross borrowing from the market for the next year would be around Rs.12 lakh crores.
- Union Finance Minister has proposed to increase the Contingency Fund of India to Rs.30,000 crore from Rs.500 crore through the Finance bill.
- States will be allowed a normal ceiling of net borrowing ceiling at 4% of GSDP for 2021-22 out of which a portion is to be spent on incremental capital expenditure. Additional borrowing ceiling of 0.5% of GSDP will be provided to states. However, that is subject to conditions.
- A fiscal deficit of 3% of GSDP is expected to be reached by 2023-24 by the states.
Union Budget 2020-2021
Sitharaman said that the fiscal deficit in revised estimates 2020-21 was pegged at 9.5% of GDP. It was funded through government borrowings, multilateral borrowings, short-term borrowings and small saving funds. The revised estimates in the previous year were Rs.34.5 lakh crore as against the original budget estimates expenditure of Rs.30.42 lakh crores. The capital expenditure in revised estimates stood at Rs.4.39 lakh crores as against budget estimates of Rs.4.12 lakh crore in 2020-21.
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