Centre committed to bring down fiscal deficit below 4.5% of GDP by 2025-26: Nirmala Sitharaman

While presenting the Union Budget 2021-22 in Lok Sabha, Finance Minister Nirmala Sitharaman on Monday said that the government is committed to bring down the fiscal deficit below 4.5% of GDP by 2025-26.

The fiscal deficit is the total additional borrowings by the government every year to bridge the gap between its income and expenditure.  

Due to the COVID-19 pandemic, the fiscal deficit is estimated to rise to 9.5% due to a rise in expenditure due to the health crisis and moderation in revenue during the fiscal year.

The deficit had soared to a high of 4.6% of the GDP in 2019-20, mainly due to poor revenue realisation.

Also Read | Govt proposes Rs 20,000-crore recapitalisation for PSBs in 2021-22

The government will borrow about Rs 12 lakh crore in the financial year 2022 that will start on April 1. The expenditure in the financial year is pegged at Rs 34.83 lakh crore, including Rs 5.54 lakh crore of capital spending. 

Also Read | Budget 2021: Rs 40,000 crore for rural infra; minimum wages for all workers among boost to social sector

To meet the expenditure of the remaining two months of FY21, Sitharaman added that the government will borrow Rs 80,000 crore.

Also Read | At 1 hour and 48 minutes, Nirmala Sitharaman makes her shortest budget speech

The Finance Minister said that the COVID-19 pandemic relief measures resulted in the rise of expenditure to Rs 34.50 lakh crore in the current fiscal as against Rs 30.42 lakh crore budgeted a year back.