Budget 2021: Fiscal deficit in FY21 at 9.5%; pegged at 6.8% in FY22, says FM

The fiscal deficit in FY21, amid the coronavirus pandemic, reached 9.5 per cent of the GDP, against the original budget estimate of 3.5 per cent, Finance Minister Nirmala Sitharaman informed in her Budget Speech on Monday. The fiscal deficit target for FY22 has been pegged at 6.5 per cent, she added.

"The fiscal deficit in RE 2020-21 is pegged at 9.5 per cent of GDP. We have funded this through government borrowings, multilateral borrowings, Small Saving Funds and short term borrowings. We would need another Rs 80,000 crores for which we would be approaching the markets in these 2 months," FM Sitharaman said.

Amid widespread demands of a substantial impetus to economic recovery, the Finance Minister said that the government has decided to peg budgetary estimate for expenditure at Rs 34.83 lakh crore.

"This includes Rs 5.54 lakh crore as capital expenditure, an increase of 34.5 per cent over the BE figure of 2020-2021. The fiscal deficit in BE 2021-2022 is estimated to be 6.8 per cent of GDP," she said.

The gross borrowing from the market for the next year would be around Rs 12 lakh crore, FM Sitharaman informed.

Fiscal deficit will be brought down to 4.5 per cent by FY26, the Finance Minister said. This will be achieved by amendments to the Fiscal Responsibility and Budget Management (FRBM) Act.

"We hope to achieve the consolidation by first, increasing the buoyancy of tax revenue through improved compliance, and secondly, by increased receipts from monetisation of assets, including public sector enterprises and land. The Contingency Fund of India is being proposed to be augmented from Rs 500 crores to Rs 30,000 crores through Finance Bill," she added.

FULL COVERAGE: Budget 2021

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