Fiscal deficit feared to rise to 7.9%

With the government’s Rs 20 lakh crore stimulus package, the country’s fiscal deficit is likely to be more than double to 7.9 per cent in the current financial year, according to an SBI research report.

The report had earlier estimated the fiscal deficit to be 3.5 per cent of GDP this fiscal.

The government has announced a cumulative package of Rs 20 lakh crore, which is nearly 10 per cent of GDP to provide relief to various segments of the coronavirus-hit economy.

“After taking into account cash outflow of these measures as well as the previous and the recent excise duty hike and DA freeze (amounting to 0.8 per cent of GDP), we now revise our baseline fiscal deficit (excluding extra budgetary resources (EBR)) to 7.9 per cent of the revised GDP in FY21 from 3.5 per cent earlier, owing to lower revenues and higher expenditure against the backdrop of Covid-19 pandemic,” the report said.