The central government has pegged the fiscal deficit target for the next financial year at 6.4 per cent of GDP, Finance Minister Nirmala Sitharaman said while presenting the Union Budget in Parliament.
The fiscal deficit target for the current financial year has been increased to 6.9 per cent of GDP from 6.8 per cent aimed earlier, Sitharaman said.
She said that the government was conscious of the need to nurture growth through public investment.
The fiscal deficit target for the next financial year is higher than economists’ estimates of 6-6.2 per cent of GDP.
Markets were disappointed with the deficit numbers with yield on the 10-year benchmark 6.54 per cent 2032 paper climbing seven basis points to 6.75 per cent.
Amid the COVID-19 pandemic, the government has been aiming to ramp up its capital expenditure and spending on infrastructure in order to ensure a sustainable revival of economic growth.
Sitharaman said on Tuesday that the government would stick to the fiscal roadmap laid out last year, according to which the fiscal deficit target is to be brought down below 4.5 per cent of GDP by 2025-26.
With the advent of the COVID-19 pandemic taking a huge toll on the government’s revenue streams, the fiscal deficit had climbed to a record high of 9.2 per cent of GDP in the previous financial year.
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