InvestorQ : How do you see the fiscal deficit for the full year 2020-21 panning out?
Aashna Tripathi made post

How do you see the fiscal deficit for the full year 2020-21 panning out?

Answer
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Aditi Sharma answered.
3 weeks ago


The news on the fiscal deficit front is not too encouraging. In fact, India’s fiscal deficit for the Apr-Jul period touched Rs.8.21 trillion or Rs.821,000 crore, which is well above the full year fiscal deficit target of Rs.7.96 trillion.

If you look at this figure in terms of percentage of GDP, then the fiscal deficit in the first four months of the fiscal year is already at 17.4% of GDP. Now that is huge and unnerving. In the previous fiscal year, the full year fiscal deficit limit was breached only in October.

At the current rate of direct and indirect tax collections, revenues from direct and indirect taxes are likely to remain at least 25% short. In fact, experts estimate that overall fiscal deficit for the full fiscal year could be closer to 7.5% of GDP against 3.5% target.

Apart from the revenue shortfall, the government could also struggle to meet its ambitious target of Rs.210,000 crore to be raised from disinvestments. With the state of the economy and the market conditions, that also looks quite a tough ask.