Union Finance Minister Nirmala Sitharaman informed in her Budget speech today (1 February) that the country's fiscal deficit for FY 2021-22 came to be 6.9 per cent of the GDP while the targeted number for FY 2022-23 would be 6.4 per cent.

Fiscal deficit is the difference between the revenue and expenditure of the government.

The numbers shared by the Finance Minister suggest that the government is not too rigid on fiscal consolidation and is clearly prioritising economic recovery and growth. After two years in which the global and national economy was hit by Covid-19, it made little sense for the government to be stubborn about fiscal deficit targets.

A rigid focus on maintaining a lower fiscal deficit would have obstructed both short-term relief to vulnerable sections and longer-term incentives to industries.

The revised estimate for the fiscal deficit amount for the current financial year is Rs 37.7 lakh crore, said the Union Finance Minster today.

The estimated fiscal deficit for the current financial year was 6.8 per cent. For FY 2020-21, the year hardest hit by Covid-induced lockdowns, the deficit was 9.5 per cent.

The Finance Minister also said that in 2022-23, states will be allowed fiscal deficit of up to 4 per cent of the GSDP.