The government’s Economic Survey 2020 pegged the gross domestic product (GDP) growth at 5 percent in the current financial year, which it said would pick up to 6-6.5 percent in the financial year ending March 2021.
According to the annual report card on the economy tabled in Parliament by Finance Minister Nirmala Sitharaman, the government may need to relax its fiscal deficit target for the current fiscal year to revive growth as the financial year starting in April is expected to pose challenges on the fiscal front.
The government is widely expected to relax its fiscal deficit target in the Union Budget, as the economic slowdown lowered revenue collections and the government provided a tax stimulus to spur investments. The fiscal deficit which is the shortfall in revenue viz-a-viz expenditure is seen slipping to 3.8 percent of GDP in 2019-20 against a budgeted 3.3 percent.
According to the Economic Survey 2019-20, private investment may get crowded on higher spending on infrastructure by the government.
The government distributes food grains at below-market prices to keep the costs low. Last year, it had budgeted Rs. 1.84 lakh crore for food subsidies in 2019-20, making up more than half of its Rs. 3 lakh crore subsidy bill.
The Economic Survey also stated that continued global trade tensions could hit India’s exports.
Earlier, the government had estimated GDP expansion at 5 percent for the fiscal year 2019-20 – the slowest pace recorded since the global financial crisis of 2008-09.