New Delhi: The fiscal deficit for the current fiscal will be 3.8%, up from the earlier estimated 3.3%, Finance Minister Nirmala Sitharaman said on Saturday.
"The issue of fiscal deficit has to be addressed in every Budget. The government has undertaken tax reforms for this. We estimate fiscal deficit at 3.8 per cent of GDP in FY20 and 3.5 per cent for Budget estimate FY21", she said in her Budget speech.
She also spoke about the loss of substantial revenue in short term due to corporate tax rate cut. Last August, the government cut corporate taxes to 22.5% which cost the exchequer Rs 1.45 lakh crore.
The FM said the procedure adopted is compliant with Fiscal Responsibility and Budget Management Act, 2003 (FRBM) Act. The Act roadmap was to reduce the fiscal deficit -- the gap between total expenditure and revenue -- to 3 per cent of the GDP by 2020-21.
As per the medium-term fiscal policy-cum-fiscal policy strategy, the government was to contain the fiscal deficit at 3.4 per cent in the current as well as next fiscal, and then bring it down to 3 per cent in 2020-21. But that is now set to change.