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Centre’s fiscal deficit at 76 pcBased on the data released by the Controller General of Accounts (CGA) on March 31, 2021, the fiscal deficit for the 11months of FY 2020-21(April – February) stood at Rs 14.05 lakh crore which is about 76% of the revised estimates(RE)and for FY 2019-20 the deficit was about 135.2% of RE.

Comparison with the Budget Estimation:

i.Fiscal Deficit:The fiscal deficit projections for FY21 was revised to Rs 18.48 lakh crore (9.5% of the GDP) from the original budget estimate of Rs 7.96 lakh crore (3.5% of the GDP)

  • The Fiscal deficit has reached a high of 4.6% of GDP in 2019-20, hence, at the Budget in February 2021 the Government aimed to reduce the fiscal deficit to 4.5% of GDP by 2025-26.

ii.Receipts: The government’s total receipts during (April-February)FY21 stood at Rs 14,13,096 crore or 88.2% of the RE (Rs 16,01, 650 crores) which was presented in the Budget

iii.Expenditure: The total expenditure was Rs 28,18,643 crore or 81.7% of the budget’s RE (34,50,305 crore). In FY20 the expenditure was 91.4% of RE.

The central government’s fiscal position in FY22 is expected to be slightly better than in FY21 as the fiscal deficit was 76% of the revised estimate.

As per the borrowing plan for H1, the government will issue securities with a maturity of 2, 5, 10, 14, 30 and 40 years and that floating-rate bonds will also be issued.

About Fiscal Deficit:

  • It is the excess of total spending from the Consolidated Fund of India (excluding repayment of the debt) over total receipts into the Fund (excluding the debt receipts) during a financial year.
  • Formula: Fiscal Deficit = Total expenditure of the government (capital and revenue expenditure) – Total income of the government (Revenue receipts + recovery of loans + other receipts).

Govt decided to Borrow 7.24-lakh crore for the 1st Half of FY22

On March 31, 2021, The Government in consultation with the RBI decided to borrow 7.24-lakh crore for the first six months of FY22. In terms of percentage, the borrowing was 5.5% less than FY21’s borrowing.

  • The borrowing of  ₹7.24-lakh crore for the first six months is about 60.06% of the gross issuances.

Comparison with the Budget’s estimation:

  • The budget for 2021-22, has estimated the government’s gross borrowing for FY22 to be Rs 12.05 lakh crore and net borrowing of Rs 9.37 crore.
  • During FY21, there was a gross borrowing of over ₹13.71-lakh crore.

Additional Info:

Accordingly, the revised limits for FPI investment in corporate bonds will be Rs 5,74,263 crore (April-September 2021) and Rs 6,07,039 crore in the second half of the fiscal. The current limit is Rs 5,41,488 crore.

RBI States the limits for FPI investment in corporate bonds will remain unchanged at 15 per cent of outstanding stock of securities for the financial year 2021-22.

Recent Related News:

In accordance with the official data released by the Controller General of Accounts (CGA), the Central Government’s fiscal deficit increased to Rs 9.53 lakh crore (9,53,154 crore), or 119.7% of the annual budget estimate of FY21, at the end of October 2020. It was 114.8% of the annual budget estimate at the end of September 2020. Also, in the first 7 months of FY20, the deficit was at 102.4% of the annual target.

On January 29, 2021, the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI) released the First Revised Estimates (FRE) which stated that the growth rate of the Indian economy was 4% in FY2019-20. This growth estimate is lower than the provisional estimates (PE) of FY20 growth at 4.2% released in May 2020.

About Controller General of Accounts (CGA):

  • CGA is in the Department of Expenditure, Ministry of Finance is the Principal Accounting Adviser to the Government of India.
  • The Annual Appropriation Accounts (Civil) and Union Finance Accounts are submitted by CGA to Parliament under Article 150 of the Constitution.
  • It has the responsibility to Disburse the Pension through Public Sector Banks (PSBs) in respect of Central Civil Pensioners, Freedom Fighters, High Court Judges, Ex-M.P. s and Ex-Presidents.
  • Current CGA –  Smt. Soma Roy Burman (24th CGA, from December 1, 2019)