New Delhi: Finance Minister Piyush Goyal said on Friday in the course of his Budget 2019-20 speech that the fiscal deficit for the current fiscal is expected to be at 3.4% for the current fiscal. For 2019-20, the government too retains the fiscal deficit at 3.4% of the GDP.
This is in keeping with the promise Goyal had made mid-January. This is better than the fiscal deficit of 3.5% in the previous year. When Arun Jaitley had made his Budget speech on this day last year, his target was to achieve 3.2% in that fiscal ending on 31 March 2018, which was overshot marginally.
Jaitley had, however, announced last year that the fiscal situation should be comfortable in 2019 and that there were no worries at the moment regarding slippages in meeting the deficit targets. “… as far as the fiscal situation is concerned, I see next year to be more comfortable as far as revenues are concerned. I cannot see at this stage that there would be any slippages,” he had said.
“We would have maintained fiscal deficit at 3.3% for year 2018-19 and taken further steps to consolidate fiscal deficit in year 2019-20. However, considering the need for income support to farmers we have provided Rs 20,000 crore in 2018-19 RE (Revised Estimate) and Rs 75,000 crore in 2019-20 BE (Budget Estimate).” the finance minister said.
“If we exclude this, the fiscal deficit would have been less than 3.3% for 2018-19 and less than 3.1% for year 2019-20,” Goyal said on Friday while presenting the interim Budget for 2019-20.
From the high of almost 6% seven years ago, Goyal said, the fiscal deficit has been brought down to 3.4% in 2018-19 RE.
The deficit was widely expected to be higher than targeted due to a combination of revenue shortfalls and increased spending ahead of the election.
What is fiscal deficit?
Fiscal deficit is the difference between total revenue and total expenditure of the government. The announcement of this figure is to tell the people how much of total borrowing is needed by the government.
Market borrowing pegged at Rs 4.48 lakh crore
The government will borrow Rs 4.48 lakh crore from the market in 2019-20, marginally higher than the Rs 4.47 lakh crore estimated for the current financial year ending March 2019.
According to the Revised Estimate, the net borrowing for the current fiscal was raised to Rs 4.47 lakh crore as against the Budget Estimate of Rs 4.07 lakh crore.
Budget 2019-20 documents showed that gross borrowing would be Rs 7.1 lakh crore for 2019-20, higher than Rs 5.71 lakh crore estimated this year.
Gross borrowing includes repayments of past loans.
Repayment for past loans in the next fiscal has been pegged at Rs 2.36 lakh crore.
Government raises funds from the market to fund its fiscal deficit through dated securities and Treasury bills.