Union Finance Minister Nirmala Sitharaman on Saturday raised the fiscal deficit projection of 2019-20 to 3.8% from the initially budgeted 3.3%. The fiscal deficit, which is the difference between the total revenue and total expenditure for 2020-21, has been pegged at 3.5%. According to Sitharaman, the government used the deviation of 0.5 percentage points as allowed by the Fiscal Responsibility and Budget Management in both 2019-20 and 2020-21.
She contended that the government had undertaken a lot of reforms for boosting investment. Moreover, the Union Finance Minister opined that the Centre’s estimation was in line with the commitment to ensure macro-economic stability. She also mentioned that this fiscal path paved the way for fiscal consolidation without compromising on the needs of investment from public funds.
Nirmala Sitharaman remarked, “Every budget must appropriately address the issue of fiscal deficit. Recently, the government has undertaken very significant tax reforms for boosting investment. However, expected tax buoyancy will take time. We estimate a fiscal deficit of 3.8% in RE 2019-20. And 3.5% for BE 2020-21. This estimation is consistent with the government’s abiding commitment to macro-economic stability and it comprises of a) 3.3 for year 2019-20 and 3 for the year 2020-21 estimate and b) Section 4.2 of the FRBM Act which provides for trigger mechanism for a deviation from estimated fiscal deficit on account of structural reforms in the economy with unanticipated fiscal implications.“
She added, “Therefore, I have taken a deviation of 0.5% consistent with section 4.3 of the FRBM Act both from RE 2019-20 and BE 2020-21. Accordingly, the written part is being laid before the Parliament as part of the medium-term fiscal policy cums strategy statement. This fiscal path commits us to the path of fiscal consolidation without compromising on the needs of investment from public funds.”
Sitharaman commenced her speech by stressing that this was a budget to boost the income and enhance purchasing power. She noted that the fundamentals of the economy were strong, inflation had been contained, banks had been cleaned up and formalization of the economy had taken place during the NDA government’s first term in office. Moreover, she talked about the positive impact after the introduction of GST and paid homage to the late Arun Jaitley for his invaluable contribution. Thereafter, she listed the success of government schemes such as PMAY, Ayushmann Bharat, financial inclusion, etc. After this, she began dealing with the three prominent themes of the budget- aspirational India, economic development and caring society.