Fiscal deficit target raised to 3.8 percent for FY20

In the recent Union Budget 2020-21, the government has estimated the fiscal deficit target for 2020-21 at 3.5 per cent of GDP (Budget Estimate).

The fiscal deficit target for 2019-20 was estimated at 3.3% earlier, which has also been revised to 3.8% of GDP, citing revenue shortage as the reason. Under the Fiscal Responsibility and Budget Management (FRBM) Act, the Section 4 (2) permits the government to relax its fiscal deficit target during time of unanticipated stress. This section has been used to increase the previous target to 3.8% in the revised estimates.