Page 454 - ES 2020-21_Volume-1-2 [28-01-21]

Fiscal Developments 81

Figure 17: Trends in General Government Debt and Deficits (as a per cent of GDP)

8 76
6.9 6.9 74
7 74
5.8 5.8 73.8 6.3
6
72
Per cent of GDP 4 3 68.9 69.8 70.5 70 Per cent of GDP
5
68

2 2.7 2.5 3.1 2.7 66
2.3
1 64
0 62
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20RE 2020-21BE
Gross Fiscal Deficit Gross Revenue Deficit Outstanding liabilities of General Government (RHS)
Source: RBI Handbook of Statistics for Indian Economy;
BE: Budget Estimates; RE: Revised Estimates
For 2019-20 RE, 2019-20 Provisional Estimate of GDP i.e. ` 20339849 has been used

OUTLOOK

2.50 The year 2020-21 has been a difficult year from the fiscal perspective. Based on the trends
available for April to November 2020, there is likely to be a fiscal slippage during the year. The
fiscal policy response of the Government has been a combination of demand and supply side
policies under the ambit of ‘Atma Nirbhar Bharat’ to cushion against the pandemic shock, and
subsequently fuel the economic recovery. Going forward, in order to sustain the recovery in
aggregate demand, it is expected that the Government may have to continue with an expansionary
fiscal stance. The expenditure support along with the various key reforms introduced during
the year are likely to impart the required momentum to medium-term growth. The calibrated
approach adopted by India allows space for maintaining a fiscal impulse the coming year. The
growth recovery would facilitate buoyant revenue collections in the medium term, and thereby
enable a sustainable fiscal path. Moreover the release of XV Finance Commission report in the
coming months, will lay down the roadmap for the long-term fiscal policy strategy for both the
Centre and the States.

CHAPTER AT A GLANCE

¾ To facilitate a resilient recovery of the economy from the impact of COVID-19 pandemic,
Government of India adopted a calibrated approach best suited for the evolving situation
of the economy in contrast with a front-loaded large stimulus package adopted by many
countries.
¾ The expenditure policy in 2020-21 changed according to the needs of an evolving situation.
It was initially aimed at supporting the vulnerable sections but once the lockdown was
unwound, it was re-oriented to reinflating overall demand through capital spending.