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Fiscal deficit to be at 7.8%: Fitch

  • Posted By
    10Pointer
  • Categories
    Economy
  • Published
    7th Nov, 2020

In a recent development, Fitch Solutions, an affiliate of Fitch Ratings cut its estimate for India’s FY21 fiscal deficit to 8% of GDP from 8.2% projected earlier.

Context

  • In a recent development, Fitch Solutions, an affiliate of Fitch Ratings cut its estimate for India’s FY21 fiscal deficit to 8% of GDP from 8.2% projected earlier.

Key points

  • It anticipated higher revenue receipts and lower government spending.
  • This was mainly driven by a strong recovery in tax revenues during Q2FY21.
  • The rating agency expects India’s economy to contract by 10.5% in the year ending March 2021 and growth to rebound to 11% in FY22.

Fiscal Deficit

  • Fiscal Deficit is the difference between the total income of the government (total taxes and non-debt capital receipts) and its total expenditure.
  • A recurring high fiscal deficit means that the government has been spending beyond its means.
  • Revenue receipts of the government: Corporation Tax, Income Tax, Custom Duties, Union Excise Duties, GST and taxes of Union territories, Interest Receipts, Dividends and Profits, External Grants, Other non-tax revenues and Receipts of union territories
  • Expenditures of the government:Revenue Expenditure, Capital Expenditure, Interest Payments and Grants-in-aid for creation of capital assets

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