Union Budget 2021: Fiscal deficit pegged at 9.5% of GDP in 2020-21

“In these last few paragraphs of Part A of my speech, I draw the attention of this august House to the fact that at the beginning of this financial year, the pandemic resulted in weak revenue inflow,” says Ms Sitharaman.

She added, “Unlike many other countries, we opted for a series of medium-size packages during the pandemic so that we could calibrate our response as per the situation.”


Once the health situation stabilised, we switched to providing a demand push.

The fiscal deficit has been pegged at 9.5% of the GDP.  We have funded this through govt borrowings, multilateral funds and short term borrowings. We need another Rs 80,000 crore for which we will approach the market in the next two months.

For 2021-22, we are estimating at a fiscal deficit of 6.8% of GDP. The gross borrowing from the market next year is expected to be Rs 12 lakh crore.

We hope to achieve consolidation of debt by increasing buoyancy of tax revenues and increased receipts from asset monetisation.

FM proposed to allow States to raise borrowings up to 4% of GSDP in 2021-22, based on recommendations of the Fifteenth Finance Commission, a portion of which will have to be earmarked for incremental capital expenditure.

FRBM Act will be amended to allow deviation as the Act mandates a fiscal deficit of 3% of GDP by March 31, 2021.

Based on the 15th Finance Commission’s recommendations, the government has decided to retain the States’ vertical share of the divisible pool of revenues at 41%. The funds for the union territories of Jammu and Kashmir and Ladakh will be provided by the Centre.

Based on the Commission’s recommendations, govt have allocated a revenue deficit grant of Rs 1,18,452 crore for 17 States, compared to Rs 74,340 crore paid to 14 States in 2020-21