Union Finance Minister Nirmala Sitharaman on Monday said that the government did not hesitate in spending big. Presenting Budget 2021-22, Sitharaman said the government estimates fiscal deficit of 6.8 per cent of the gross domestic product (GDP) in the next financial year beginning April 1. However, the fiscal deficit in 2020-21 is estimated to soar up to 9.5 per cent due to rise in expenditure on account of the outbreak of COVID-19 and moderation in revenue during the fiscal year.
”These people had earlier given suggestions to increase spending by printing currency and not to worry about rating agencies. The same people are now raising questions about fiscal deficit. I was in favour of spending more and I had then said that if I do not spend now, I will be halting growth. We did not hesitate in spending," Sitharaman told India TV, in response to those questioning how the government would bridge its fiscal deficit.
“Yes, I have announced the calendar for borrowing this year, we will be announcing borrowing for next year too, we are in discussion with RBI for borrowing at reasonable rates. Government will surely go in for borrowing. Our aim is to borrow to a limit, and then gradually reduce fiscal deficit so that the growth of economy is not hampered," she said on being asked how govt would arrange funds for spending more.
For the current fiscal year, the government had earlier pegged the fiscal deficit of 3.5 per cent. While unveiling the Budget 2021-22 in the Lok Sabha, the Finance Minister said, the government proposes to bring down the fiscal deficit below 4.5 per cent of GDP by 2025-26.
Fiscal deficit is an indication of the government's borrowing to meet the shortfall between expenditure and receipts from taxes and other sources. The deficit had soared to a high of 4.6 per cent of the GDP in 2019-20, mainly due to poor revenue realisation.
The Finance Minister said the government plans to borrow Rs 80,000 crore during the residual two months of the current fiscal year.