Is the government likely to meet its fiscal deficit target for this year?

While fiscal deficit is still a challenge in this year, the good news is that it is fairly under control in the first four months of the fiscal year till the end of July. As of July 2021 end, fiscal deficit stood at Rs.321,000 crore, which is roughly 21.3% of the budgeted estimates for the full fiscal year FY-22. That is fairly comfortable and the key takeaway could be that fiscal deficit may not spill over like last time.

It may be recollected that for FY21, the government had scaled up its fiscal deficit target sharply to 9.5% on account of COVID but ended with 9.3%. However, for FY22, the target is peg fiscal deficit at 6.8% of GDP and that has been respected till now. The fiscal deficit control is largely on account of reduced expenditure by the government as well as robust revenues from direct and indirect taxes.