Govt. on track to meet the FY22 fiscal deficit target
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Govt. on track to meet the FY22 fiscal deficit target
Topic: Economy
In news: The Centre is well on track to meeting its fiscal deficit target for the current fiscal on the back of a robust rebound in tax revenues, as per the Economic Survey for 2021-22.
About:
- The agile fiscal policy approach adopted by the Central Government, coupled with the buoyant revenue collection received so far this year, has created headroom for taking up additional fiscal policy interventions based on the need of the evolving situation.
- In Budget 2021-22, Finance Minister Nirmala Sitharaman had, in the wake of the Covid-19 pandemic, disbanded the government’s fiscal consolidation roadmap to reach a fiscal deficit of 3 per cent of GDP, but announced its medium-term objective to reduce the fiscal deficit to 4.5 per cent of GDP by 2025-26. She had pegged the fiscal deficit target at 6.8 per cent of GDP for 2021-22 against 9.2 per cent in the previous fiscal.
- In the first eight months of the current fiscal, the Centre’s fiscal deficit stood at 46.2 per cent of the full-year target.
- As per IMF’s latest World Economic Outlook projections, India’s real GDP projected to grow at 9 percent in 2021-22 and 2022-23 and at 7.1 percent in 2023-2024, which would make India the fastest growing major economy in the world for all 3years.
- Agriculture and allied sectors expected to grow by 3.9 percent; industry by 11.8 percent and services sector by 8.2 percent in 2021-22.
- On demand side, consumption estimated to grow by 7.0 percent, Gross Fixed Capital Formation (GFCF) by 15 percent, exports by 16.5 percent and imports by 29.4 percent in 2021-22.
- The Eco- nomic Survey noted that India’s public debt portfolio is “stable and also sustainable”.
- “Public debt portfolio exhibits low currency and interest rate risk owing to low reliance on external borrowing and issuance of majority of securities at fixed coupon rate. Further, most of the external borrowing are from official sources which are of long term and concessional in nature.