India Economics - Second Wave Fallout - Fiscal Deficit For FY22 To Widen: CARE Ratings

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CARE Ratings Research Report

The second wave of the pandemic which has been more intense and widespread than the first has been a setback for India’s fledging economic recovery.

Economic growth in FY22 is expected to be lower than earlier anticipated and this would perforce have implications on the fiscal math of the government.

Following the sharp widening in fiscal deficit to 9.4% of gross domestic product in FY21, the central government with the aim of gradually bringing down the fiscal deficit to less than 4.5% of GDP by FY26, budgeted a fiscal deficit of 6.8% for FY22.

Given the prevailing and evolving situation, this target is unlikely to be met.

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