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Why Did The Finance Minister Keep Everyone Guessing On The Fiscal Deficit Number?


It is normally a practice by Finance Minister's to reveal the fiscal deficit number in the middle or at the very beginning of the Budgetary speech. This number is critical and is watched by economists, analysts, sovereign rating agencies etc. The difference between total revenue and total expenditure of the government is termed as fiscal deficit.

There were thoughts that the fiscal deficit number would definitely be over the 3.4 per cent of GDP, given the precarious position of finances, thanks to a slowing economy.

Why Did The Finance Minister Keep Everyone Guessing On The Fiscal Deficit Number

The surprise was when the number was pegged at 3.3 per cent of GDP for 2019-20. This was a great consolidation effort by the Finance Minister. The question that now arises is: Why didn't the Finance Minister, blow the trumpet earlier? In fact, it was probably announced after the Budgetary recommendations were made.

This led to all kinds of speculation, that there was something that the government was hiding. In the end, it showed that she was hiding nothing and the government is determined towards a fiscal consolidation. Probably, sometimes experience does matter.

In any case, 3.3 per cent of GDP is a great number to go with and analysts should be pleased. All's well that ends well.

Story first published: Friday, July 5, 2019, 16:00 [IST]
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