Fiscal deficit target cut to 3.3 per cent for FY20

Out of major factors to look for in the budget, the fiscal deficit is something that economist are keen to understand.

Let’s just look at what fiscal deficit actually means. In simple words, the fiscal deficit is the difference between total revenue and expenditure of the government. It acts as an indication of the total borrowings needed by the government. It is important to mention that, in the calculation of total revenue, borrowings are not included.

The economic survey tabled on 4 July, projected the GDP to grow at 7 per cent in FY20, with maintaining macro-economic stability. The deficit is pegged at 3.4 per cent of GDP for FY19. The survey provisionally estimated 2.9 per cent growth rate for key sectors such as agriculture, forestry and fishing sector.

In Budget presented on Friday, the fiscal deficit target is cut to 3.3 per cent of GDP from 3.4 per cent, in FY20.

The market reacted negatively to the budget and close to 400 points. Sensex was down by 394.67 points to close at 39,513.39.