India Economics - Central Government’s Fiscal Deficit At 9.22% Of GDP, Beats Revised Estimates: CARE Ratings

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CARE Ratings Research Report

The central government finances were severely impacted in the financial year 2020-21 following the outbreak of the Covid-19 pandemic but they turned out to be marginally better because of improved tax collections and reduction in capital spending.

This translated into the fiscal deficit number of Rs 18.2 lakh crore to be better than the revised estimate for FY21 (Rs 18.5 lakh crore).

From the point of view of year-on-year comparison, lower revenue collections and high expenditure needs have led to sharp widening of the fiscal deficit in FY21.

The fiscal deficit to gross domestic product ratio is estimated at 9.22% of GDP (based on provisional estimate of Rs 197.45 lakh crore of GDP in FY21) almost double than 4.6% witnessed in FY20 but better than the 9.5% which was estimated at the time of Budget 2021-22.

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