The denominator effect of a higher-than-expected nominal GDP

Healthy revenues, failing disinvestment, and rise in nominal GDP may take fiscal deficit from the Budgeted 6.8% of GDP to anywhere between 6.9% and 7.3%

The Union Budget of 2021-22 said that India’s nominal gross domestic product would grow 14.4 per cent this financial year, from Rs 194.8 trillion in 2020-21, to Rs 222.9 trillion. The provisional estimate for FY22 turned out to be Rs 197.5 trillion. Assuming that the nominal growth rate remains constant, if we apply the same nominal growth rate, it could take the nominal GDP of 2021-22 to Rs 225.9 trillion. In fact, the First Advance Estimate (FAE) that will be released on 7 January will spell out a clear number. 

But even before that, it has become apparent that nominal