Budget 2017: FM pegs fiscal deficit target at 3.2% of GDP for next fiscal yr

Karthik KrishnanMoneycontrolIn a widely anticipated move, the Finance Minister Arun Jaitley pegged the fiscal deficit target at 3.2 percent of GDP for 2017-18. The FRBM Act has provided for 3 percent for three years. 

A fiscal deficit range will replace a definite target, which is expected to free the government’s hands in meeting its fiscal goals. A range will further help the government score brownie points with credit rating agencies who are on the lookout for deviations from public borrowing targets.

Jaitley had earlier announced that from FY18, the distinction between Plan and non-Plan expenditure will no longer hold, once the 12th Five-year Plan ends in 2016-17.

Fiscal deficit is the gap between the government's total spending and the sum of its revenue receipts and non-debt capital receipts. It represents the total amount of borrowed funds required by the government to completely meet its expenditure.