Estimated fiscal deficit to reach 7.5% of GDP this year: experts

The country’s fiscal deficit is projected to reach 7.5 percent of gross domestic product (GDP) in the current financial year 2020-21. Experts have expressed this opinion. According to them, the fiscal deficit will remain above the estimate due to declining revenue collection due to the Covid-19 epidemic. The budget estimate for the fiscal deficit has been kept at 3.5 percent in the current financial year. In this context, the fiscal deficit is likely to be 100 percent higher than the budget estimate.

Finance Minister Nirmala Sitharaman had estimated the fiscal deficit to be Rs 7.96 lakh crore or 3.5 percent of GDP in the 2020-21 general budget. Similarly, the Finance Minister had estimated the gross market debt to be Rs 7.80 lakh crore in the budget. The government, which was facing shortage of funds in the midst of the Covid-19 crisis, increased its market lending program by more than 50 percent to Rs 12 lakh crore for the current financial year in May.

ICRA chief economist Aditi Nair said the fiscal deficit is expected to reach 7.5 percent in the financial year ending in March. “We estimate the fiscal deficit to be Rs 14.5 lakh crore or 7.5 per cent of GDP,” she said. She said the gross domestic product at current prices is estimated to be Rs 194.82 lakh crore in 2020-21. At the same time, the initial estimate of GDP released for the financial year 2019-20 on May 31, 2020 was Rs 203.40 lakh crore.

EY India Chief Policy Advisor DK Srivastava said that the central government may face a fiscal deficit of more than Rs 12 lakh crore announced earlier this year. The fiscal deficit of the Center reached Rs 10.7 lakh crore during the first eight months of the current financial year, April-November, which is 135 percent of the full year’s budget estimate. The fiscal deficit crossed the budget target in July only because of the lockdown imposed due to the Covid-19 epidemic.