Finance Minister Nirmala Sitharaman on Tuesday pegged the country's fiscal deficit during financial year 2021-22 at 6.9 per cent of GDP as against the target of 6.8 per cent.
Meanwhile, the government is targeting fiscal deficit of 6.4 per cent for financial year 2022-23, Sitharaman said during her Budget speech.
"The revised fiscal deficit in the current year is estimated at 6.9 per cent of GDP as against 6.8 per cent projected in the Budget Estimates. The fiscal deficit in 2022-23 is estimated at 6.4 per cent of GDP, which is consistent with the broad path of fiscal consolidation announced by me last year to reach a fiscal deficit level below 4.5 per cent by 2025-26," Sitharaman said.
Explaining the rationale behind the fiscal deficit target for FY23, she said the government is conscious of the need to nurture growth, through public investment, to become stronger and sustainable.
The government has pegged the total expenditure in 2022-23 at Rs 39.45 lakh crore, while total receipts other than borrowings are estimated at Rs 22.84 lakh crore. The total expenditure for FY22 has been revised to Rs 37.70 lakh crore, while capital expenditure has been revised to Rs 6.03 lakh crore.
Ketan Dalal, Managing Director at Katalyst Advisors, said, "The revised fiscal deficit is expected to be 6.9 per cent of GDP in FY21-22, as against expected at 6.8 per cent; the imperatives of government spend are apparent, and hence, in spite of buoyancy in tax collections, there is fiscal pressure."
Given the increase in input costs, fuel and freight costs, there is likely to be margin squeeze on companies which is likely to lead to pressure on tax collections. Therefore, it's a moot point as to whether tax collection estimates can be met, he said, adding that whether the estimated fiscal deficit can be contained at 6.4 per cent in FY22-23 remains to be seen.
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