Budget 2022: India’s fiscal deficit pegged slightly higher at 6.9% in FY22

New Delhi, Feb 1 (PTI): The country’s fiscal deficit is projected to be higher at 6.9 per cent this fiscal as against 6.8 per cent estimated earlier, with Finance Minister Nirmala Sitharaman emphasising the need for stronger and sustainable growth through public investment.

The marginal rise in fiscal deficit for the current fiscal is against the expectations of the market and experts who expected a slight decline in the numbers on the back rising tax collections.

“The fiscal deficit in 2022-23 is estimated at 6.4 per cent of GDP, which is consistent with the broad path of fiscal consolidation announced by me last year to reach a fiscal deficit level below 4.5 per cent by 2025-26.

“While setting the fiscal deficit level in 2022-23, I am conscious of the need to nurture growth, through public investment, to become stronger and sustainable,” Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2022-23 in Parliament, said on Tuesday.

Further, she said, the revised fiscal deficit, the gap between expenditure and revenue, in the current year, is estimated at 6.9 per cent of GDP as against 6.8 per cent projected in the Budget Estimates previously.

The fiscal deficit of the government for 2022-23 is estimated to be Rs 16,61,196 crore. The Revised Estimates for 2021-22 indicate a fiscal deficit of Rs 15,91,089 crore as against the Budget Estimates of Rs 15,06,812 crore.

During the Finance Minister’s interaction with media, Finance Secretary T V Somanathan said the number is achievable.

Revenue Secretary Tarun Bajaj termed 14 per cent rise in tax collection as pragmatic.

With regard to inclusion of sovereign bonds in global bond indices, Bajaj said discussion are on the capital gain tax.

“The capital gain tax right should come to country where transaction emanate from. That has been our stand and those discussion are still on and we are propounding that,” he said.

This is not the right time to take decision on that, Bajaj added.

The inclusion would attract higher foreign flows as many overseas funds are mandated to track global indices. It will also help bring in large passive investments from overseas, as a result of which more domestic capital would be available for industry as crowding out would be reduced.

The finance minister stated that the outlay for capital expenditure in the Union Budget is once again being stepped up sharply by 35.4 per cent from Rs 5.54 lakh crore in the current year to Rs 7.50 lakh crore in 2022-23.

With capital expenditure taken together with provision made for creation of capital assets through Grants-In-Aid to States, the ‘Effective Capital Expenditure’ of the central government is estimated at Rs 10.68 lakh crore in 2022-23, which will be 4.1 per cent of GDP, she said.

The total expenditure in 2022-23 is estimated at Rs 39.45 lakh crore, while the total receipts other than borrowings are estimated at Rs 22.84 lakh crore.

She further said that as against a total expenditure of Rs 34.83 lakh crore projected in the Budget Estimates 2021-22, the Revised Estimates are Rs 37.70 lakh crore.