Fiscal Policy & Revenue (Part – II)

Interest Payment was the largest item of revenue expenditure of Central Government in the years 2008-10. In Interim Union Budget Estimates 2024-25, interest payment is still the largest item of the Government's expenditure.

In the Union Budget 2015-16, interest payments had the largest share in total Non-Plan expenditure. Classification of expenditure into "Plan' and 'Non-Plan' was eliminated from the Union Budget 2017-18. Interest payment is still the largest item of expenditure in the Union Budget.

In the Union Budget 2015-16, interest payments had the largest share in total Non-Plan expenditure. Classification of expenditure into "Plan' and 'Non-Plan' was eliminated from the Union Budget 2017-18. Interest payment is still the largest item of expenditure in the Union Budget.

Control over the fiscal deficit can be achieved by the institutional reforms. Downsizing of bureaucracy will reduce the government expenditure, while selling/offloading the shares of PSUs will increase the government receipts. Hence these two measures can be used to control the fiscal deficit in India. Encouraging FDI inflows and privatization of higher educational institutions are not instrumental to control the fiscal deficit. Thus, option (d) is the correct answer.

The fiscal deficit target for the year 2017-18 was raised from the Budget estimated 3.2 percent to 3.5 percent of GDP in the revised estimates. In the Union Budget 2018-19, the fiscal deficit target for the year 2018-19 was placed at 3.3 percent of GDP. Thus, statement 1 and 2 are correct, while statement 3 is incorrect as in the Union Budget 2018-19, the fiscal deficit target for the year 2020-21 was projected at 3.0 percent of GDP. In the Union Budget 2020-21, the fiscal deficit was targeted at 3.5% of GDP in 2020-21, but as per the actual figures it was at 9.2% of GDP (due to COVID-19 pandemic). In the Union Budget 2021-22, the fiscal deficit was targeted at 6.8% of GDP in 2021-22, and as per the actual figures it was at same level. In the union Budget 2022-23, the fiscal deficit is targeted at 6.4% of GDP in 2022- 23 which is also at same level in the actual figures. In the Union Budget 2023-24, the fiscal deficit is targeted at 5.9% of GDP in 2023-24, but as per the revised estimates it was at 5.8% of GDP. In the Interim Union Budget 2024-25, the fiscal deficit target has been placed at 5.1% of GDP in 2024-25.

The fiscal deficit target for the year 2017-18 was raised from the Budget estimated 3.2 percent to 3.5 percent of GDP in the revised estimates. In the Union Budget 2018-19, the fiscal deficit target for the year 2018-19 was placed at 3.3 percent of GDP. Thus, statement 1 and 2 are correct, while statement 3 is incorrect as in the Union Budget 2018-19, the fiscal deficit target for the year 2020-21 was projected at 3.0 percent of GDP. In the Union Budget 2020-21, the fiscal deficit was targeted at 3.5% of GDP in 2020-21, but as per the actual figures it was at 9.2% of GDP (due to COVID-19 pandemic). In the Union Budget 2021-22, the fiscal deficit was targeted at 6.8% of GDP in 2021-22, and as per the actual figures it was at same level. In the union Budget 2022-23, the fiscal deficit is targeted at 6.4% of GDP in 2022- 23 which is also at same level in the actual figures. In the Union Budget 2023-24, the fiscal deficit is targeted at 5.9% of GDP in 2023-24, but as per the revised estimates it was at 5.8% of GDP. In the Interim Union Budget 2024-25, the fiscal deficit target has been placed at 5.1% of GDP in 2024-25.

As per the actual figures, the fiscal deficit of the Union Government had reached 9.2 percent of GDP during the pandemic FY 21 (2020-21) and it has moderated to 6.7 percent of GDP in FY 22 (2021-22).

As per the actual figures, in recent financial years, the revenue collection (Revenue Receipts) has only gone down in FY 21, otherwise it has shown an increasing trend.

Hence, among the given statements, only statement 1 is correct

As per the Union Budget 2020-21, the fiscal deficit for the year 2019-20 was targeted at 3.3 percent (B.E.) of GDP, while for the year 2020-21, the fiscal deficit target was aimed at 3.5 percent (B.E.) of GDP. In the actual figures presented in Interim Union Budget 2024-25, fiscal deficit for year 2019-20 and 2020-21 were at 4.6 percent and 9.2 percent (due to Covid 19 pandemic) of GDP respectively, while fiscal deficit for year 2021-22 stood at 6.8%. In Interim Union Budget 2024-25, the Government aims to restrict the fiscal deficit at 5.1 percent of GDP for the year 2024-25.

In the Union Budget 2000-01, fiscal deficit was targeted at 5.1% of Gross Domestic Product (GDP). Fiscal deficit was targeted at 5.9% of the GDP in the Union Budget 2023-24, which is at 5.8 in the revised estimates of 2023-24. In Interim Union Budget 2024-25, the Government aims to restrict the fiscal deficit at 5.1% for the year 2024-25.

Among the given financial years, fiscal deficit GDP/ ratio had been maximum in the year 2011-12(5.9%). Fiscal deficit was at 9.2 percent of the GDP in 2020-21 which is the highest level of fiscal deficit for the Centre since 8.4 percent reported in financial year 1990-91.