Historical Trend of India’s Fiscal Deficit

Introduction

In this article, we are going to see the fiscal deficit of India, current statistics and historical trend of India’s fiscal deficit.

In our earlier article, we have seen what is fiscal deficit, how to calculate it as well as severe impacts of borrowings (to finance the deficit) on the country’s economy.

Fiscal Deficit of India

For India, as a developing economy, the government needs to spend more on infrastructure development. So maintaining a fiscal deficit is justified.

CURRENT STATISTICS OF INDIA’S FISCAL DEFICIT

  • India’s fiscal deficit was at Rs 8.51 lakh crore in February-end touching 4.52% of GDP. The receipts were sufficient to cover only 61% of expenditure.
  • As a percentage to GDP, fiscal deficit is 4.52% and revenue deficit is 3.45%. The figures mean fiscal deficit has crossed 134% of the government’s budget estimate. Last year, the deficit stood at 120%, during the same period.
  • In FY19, the total expenditure was Rs 21.9 lakh crore or 89% of the budget estimate. Total expenditure comprised revenue expenditure of Rs 19.15 lakh crore, at 89% of budget estimate, and capital expenditure of Rs 2.73 lakh crore at 87% of budget estimate.

Historical TREND OF FISCAL DEFICIT OF INDIA

We have represented the trend of India’s Fiscal Deficit as a % of GDP with the help of following graph :

Fiscal Deficit of India
Fiscal Deficit of India as % of GDP
  • From the downward trend of the graph, we can say that the NDA dispensation has brought Fiscal Deficit figures down in the last five years. They broadly averted any big slippage in the deficit since it came to power in 2014.
  • The fiscal deficit is likely to be revised upwards from 3.4% in the upcoming Budget in July 2019. Its aim is to take on the economic slowdown in the country. The move is aimed at stepping up public expenditure in Infrastructure, job creation, social and farmers’ schemes etc.
  • Thus, in a scenario where consumption, demand, investment and capital formation need support, fiscal deficit can be secondary point. The revision in the fiscal deficit would be well-controlled.

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