Capital outlay should support a higher pace of GDP expansion in FY22

The fiscal deficit of the government of India has increased sharply to 9.5 per cent of GDP in the Revised Estimates for FY21, relative to the budgeted target of 3.5 per cent

The Union Budget for FY2022 has been presented as India and the world attempt to exit the clutches of the Covid-19 pandemic. Today's Budget speech was announcement-packed, prioritising health and infrastructure, and delivered to a large extent on the extraordinarily elevated expectations. Nevertheless, timely implementation of the myriad proposals holds the key for sustaining the incipient growth revival that in underway in H2 FY2021, and helping the economy attain a higher growth trajectory over the medium term.

In its Budget Estimates (BE) for FY2021, released in February 2020, the Government of India (GoI) had pegged its fiscal deficit at Rs