The fiscal deficit numbers announced in the Union Budget have surprised almost all analysts. According to the revised estimates, the fiscal deficit at Union level will expand to 9.5 per cent of gross domestic product (GDP) in 2020-21. The government is aiming to contain it at 6.8 per cent in the next fiscal year and to below 4.5 per cent of GDP by 2025-26. The expansion in the Budget deficit is not very difficult to justify. First, the economy is expected to contract by 7.7 per cent in the current fiscal year, which has not only resulted in a significant loss of revenue, but also requires government support to recover the lost ground at the earliest. Second, the government has made a big shift towards improving transparency and has brought off-Budget items related to subsidies on its books, pushing up the headline fiscal deficit.
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First Published: Thu, February 04 2021. 22:06 IST