Fiscal math of the imponderables

Growth holds the key to the government's fiscal deficit slippage

How large will be the Union government’s fiscal deficit in 2020-21? The Union Budget for the current year had projected the deficit to be at 3.5 per cent of gross domestic product (GDP), a little lower than the 3.8 per cent shown in the revised estimate for 2019-20. Those estimates were made in a pre-Covid world. The lockdown for about two months has played havoc with the prospects of economic growth and government finances. Nobody believes that the 2020-21 fiscal deficit target set in February can be achieved.

Not surprisingly, the government took early measures to increase its borrowing plan