- Expenditure: The government proposes to spend Rs 30,42,230 crore in 2020-21, which is 7% higher than the revised estimate of 2019-20.
- Receipts: The receipts (other than net borrowings) are expected to increase by 3% to Rs 22,45,893 crore, owing to higher estimated revenue from disinvestments.
- The government has assumed a nominal GDP growth rate of 10% (i.e., real growth plus inflation) in 2020-21.
- The nominal growth estimate for 2019-20 was 12%.
- Revenue deficit is targeted at 2.7% of GDP, which is higher than the revised estimate of 4% in 2019-20.
- Fiscal deficit is targeted at 3.5% of GDP, lower than the revised estimate of 3.8% in 2019-20. Note that the government is estimated to breach its budgeted target for fiscal deficit (3.3%) in 2019-20 and the medium term fiscal target of 3% in 2020-21.
- Among the top 13 ministries with the highest allocations, the highest percentage increase is observed in the Ministry of Communications (129%), followed by the Ministry of Agriculture and Farmers’ Welfare (30%) and the Ministry of Home Affairs (20%)
Fiscal Responsibility and Budget Management targets
- The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 requires the central government to progressively reduce its outstanding debt, revenue deficit and fiscal
- Fiscal deficit is an indicator of borrowings by the government for financing its expenditure. The estimated fiscal deficit for 2020-21 is 3.5% of GDP.
- Revenue deficit is the excess of revenue expenditure over revenue receipts. Such a deficit implies the government’s need to borrow funds to meet expenses which may not provide future returns. The estimated revenue deficit for 2020-21 is 2.7% of GDP.
- Primary deficit is the difference between fiscal deficit and interest payments. It is estimated to be 0.4% of GDP in 2020-21.