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State of the Economy 29

1.34 On account of a sustained revenue collection and a targeted expenditure policy by the
Government of India, the fiscal deficit for April-November 2021 has been contained at 46.2 per
cent of Budget Estimates (BE) which is nearly one third of the proportion reached during the
same period of the previous two years (135.1% of BE in April-November 2020 and 114.8% of
BE in April-November 2019). The primary deficit during the period April to November 2021
turned up at nearly half of the level it had reached during April to November 2019 (Figure 30)
This implies that the Government has the fiscal capacity to maintain the support, and ramp up
capital expenditure when required. The strong revival in revenues also provides Government
with fiscal space to provide additional support as well, if necessary.

Financial Sector

1.35 The financial system is always a possible area of stress during turbulent times. However,
India’s capital markets, have done exceptionally well and have allowed record mobilization
of risk capital for Indian companies. The Sensex and Nifty scaled up to touch its peak at
61,766 and 18,477 on October 18, 2021. Among major emerging market economies, Indian
markets outperformed its peers in April-December 2021. The year 2021-22 so far has been an
exceptional year for the primary markets with a boom in fundraising through IPOs by many new
age companies/tech start-ups/unicorns. ` 89,066 crore was raised via 75 IPO issues in April-
November 2021, much higher than in any year in the last decade (details in Chapter 4).

1.36 More significantly, the banking system is well capitalized and the overhang of Non-
Performing Assets seems to have structurally declined even allowing for some lagged impact of
the pandemic. The Gross Non-Performing Advances (GNPA) ratio (i.e. GNPAs as a percentage
of Gross Advances) and Net Non-Preforming (NNPA) ratio of Scheduled Commercial Banks
(SCBs) continued to decline since 2018-19. GNPA ratio of SCBs decreased from 7.5 per cent
at end-September 2020 to 6.9 per cent at end-September 2021. NNPA ratio of SCBs also
declined from 6 per cent at end of 2017-18 to 2.2 per cent at end-September 2021 (Figure
31). Simultaneously, the Capital Adequacy Ratio has continued to improve since 2015-16. The
Capital to risk-weighted asset ratio (CRAR) of SCBs increased from 15.84 per cent at end-
September 2020 to 16.54 per cent at end-September 2021 on account of improvement for both
public and private sector banks (Figure 32).
Figure 31: GNPA and NNPA ratio of SCBs Figure 32: Capital Adequacy Ratio (per cent)

17
12 GNPA ratio 16
Percentage of Gross Advances 8 per cent 14
10
NNPA ratio
15
6
13
4
12
2
0
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Sep-21 11 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Sep-21
10

Source: RBI Source: RBI