InvestorQ : Is it true that India’s fiscal deficit for the fiscal year 2020-21 could double due to the COVID-19 package?
Khushi Patel made post

Is it true that India’s fiscal deficit for the fiscal year 2020-21 could double due to the COVID-19 package?

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Anjana Aiyar answered.
8 months ago
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In fact, the fiscal deficit is expected to more than double in the fiscal year 2020-21. A recent SBI Research report has warned that fiscal deficit for FY21 could scale up sharply to 7.9% as the government spends heavily on stimulating the economy. The original target fiscal deficit for FY21 was 3%, which was later revised upwards to 3.5% in the 2020 Union Budget. Now, that also looks set to more than double. Out of the Rs.20 trillion rescue package, nearly Rs.9.50 trillion will be fiscal measures which the government needs to provide for. The fiscal deficit is likely to substantially worsen due to the lockdown and the fall in direct and indirect tax revenues. If the fiscal deficit scales so high, then it could hit the rupee and also the sovereign ratings; as Moody’s has already warned.

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