Economic Survey 2022: Centre well on track to meet FY22 fiscal deficit target

The central government is "well on track" to meet its fiscal deficit target for FY22, according to the Economic Survey for 2021-22.

"...the agile fiscal policy approach adopted by the Government, coupled with the buoyant revenue collection received so far this year, has created headroom for taking up additional fiscal policy interventions based on the need of the evolving situation," the Survey, tabled in Parliament on January 31, said.

"Thus, it is expected that reaching the budget estimate for fiscal deficit during 2021-22 will not be a concern for the Central Government," it added.

The 2021 Budget had set a fiscal deficit target of 6.8 percent of the Gross Domestic Product for FY22. This would mean a reduction of 240 basis points from the FY21 fiscal deficit of 9.2 percent of GDP.

While the coronavirus pandemic forced the government last year to disband its fiscal consolidation roadmap to reach a fiscal deficit of 3.0 percent of GDP, its medium-term objective is to reduce the deficit to 4.5 percent of GDP by FY26.

So far in the first eight months of FY22, the Centre's fiscal deficit has amounted to 46.2 percent of the full-year target. This is far lower than what it usually is, thanks to a marked improvement in tax collections.

While some economists have expressed reservations about the government's finances for this year, a Moneycontrol survey showed it is likely to meet its fiscal deficit target for the current financial year and set an aim of 6.1 percent of GDP for FY23.

Commenting on the broader issue of government debt, which has increased sharply during the pandemic, the Economic Survey said India's public debt portfolio is "stable and also sustainable".

"Public debt portfolio exhibits low currency and interest rate risk owing to low reliance on external borrowing and issuance of majority of securities at fixed coupon. Further, most of the external borrowing are from official sources which are of long term and concessional in nature," the Survey noted.