Budget 2020: Sitharaman invokes escape clause, FY20 fiscal deficit at 3.8%1 min read . Updated: 01 Feb 2020, 01:56 PM IST
- FY21 fiscal deficit target set at 3.5% of GDP
- Budget has assumed a nominal GDP growth of 10% for 2020-21
New Delhi: Given the tepid growth in revenue collections, Finance minister Nirmala Sitharaman on Saturday, while presenting the Union Budget, invoked the escape clause to take a 50 basis points leeway in the fiscal deficit number for 2019-20, taking the revised estimate to 3.8% of the GDP.
Sitharaman proposed reducing fiscal deficit by 30 basis points to 3.5% of GDP in 2020-21.
The Centre’s fiscal deficit recorded a sharp increase in April-December, touching a considerable 132.4% of the budget estimates compared with 112.4% during the same period a year ago. This followed a contraction in net tax revenue and disinvestment receipts, amidst a substantial 32% growth in expenditure in December.
"Given the revenue situation, there may be some slippage in fiscal deficit in FY20. At the current situation, there is a need for a growth impetus," K. Subramanian, the chief economic adviser in the finance ministry had said on Friday while releasing the Economic Survey for 2019-20.
Sitharaman said the Budget has assumed a nominal GDP growth of 10% for 2020-21. The Economic Survey had said the economy would grow at 6-6.5% in 2020-21 from the estimated 5% in the financial year ending 31 March.
Though Sitharaman did not detail the disinvestment target for the next fiscal, she said the government will partly divest stake in Life Insurance Corporation of India through an initial public offer.
In the current fiscal so far, the government has garnered ₹18,094.59 crore through disinvestment transactions compared to an ambitious target of ₹1.05 trillion rupees.