Fiscal Deficit 2022: FM projects Fiscal deficit at 6.4% of GDP in FY23

Fiscal Deficit 2022

Finance Minister Nirmala Sitharaman pegs the fiscal deficit at 6.4% of GDP in 2022-23. The current fiscal deficit has been revised and put at 6.9% against the budget estimate of 6.8%. The FM said that the revised figure of fiscal deficit is still consistent with the goal of ambitious fiscal consolidation announced last year.

In her budget speech, the Finance Minister said "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% by 2025-26"

Fiscal deficit and government’s aim

The government’s fiscal deficit of 2022 was down to Rs 6.96 lakh crores or by 35.3% on year-on-year basis for April-November fiscal period. The previous  budget of 2022-22 forecasted the fiscal deficit for the entire fiscal year at Rs 15.07 lakh crore, i.e.; 6.8%. The same, however, has been revised to 6.9% as the government still wants to prioritize growth first. Having said this, the Finance Minister asserted that the government is still on its goal of fiscal consolidation and to contain the fiscal deficit as a percentage of GDP at 4.5% by 2025. She also added that the revised fiscal deficit figure of 6.9% is still very consistent with the government’s goal.

The revenue deficit for 2022-23 is now seen at 3.8% of the GDP. Furthermore, the states will be allowed to have a fiscal deficit of 4% of GSDP for the 2022-23 period.

Capital Expenditure

Nirmal Sitharaman also stated that the capital expenditure outlay in the budget is again increased by a commendable margin of 35.4%, i.e., to Rs 7.5 lakh crores from Rs 5.54 lakh crores. This is over 2.2 times higher than the expenditure in 2019-20 and is now 2.9% of the country’s GDP. As per the Finance Minister, this huge increment in capital expenditure is given in order to sustain and accelerate the economic recovery. The total expenditure for 2022-23 is estimated to be at 10.68 lakh crore. 

The government finances remained healthy in the April-November period, as per the figures released by the Controller General of Accounts. The revenue collections went well resulting in a 66% increase in the total receipts, against only an 8.8% increase in the total expenditure. The numbers for November were not in good light as the total receipts got down by 19% as compared to the same period of the previous year. The fiscal deficit budget 2022 was made keeping the economic recovery, growth as well as fiscal consolidation.

Here is the pre-budget expectation on Fiscal Deficit 2022.