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How much fiscal deficit is targeted in Union Budget 2021?
1. 5.5%
2. 4.8%
3. 6.8%
4. 9%
5. 3%

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Correct Answer - Option 3 : 6.8%

The correct answer is 6.8%.

  • Revenue deficit is targeted at 5.1% of GDP, and fiscal deficit is targeted at 6.8% of GDP in 2021-22. 
  • The target for the primary deficit (which is fiscal deficit excluding interest payments) is 3.1% of GDP. 
  • In 2020-21, as per the revised estimate, the revenue deficit is 7.5% of GDP, and the fiscal deficit is 9.5% of GDP.

  • Total Expenditure: The government is estimated to spend Rs 34,83,236 crore during 2021-22 which is an annual increase of 14% over 2019-20.  Out of the total expenditure, revenue expenditure is estimated to be Rs 29,29,000 crore (12% annual increase over 2019-20) and capital expenditure is estimated to be Rs 5,54,236 crore (29% annual increase over 2019-20).
  • Total Receipts: The government receipts (excluding borrowings) are estimated to be Rs 19,76,424 crore, an annual increase of 6% over 2019-20.  Borrowings are estimated at Rs 15,06,812 crore (27% annual increase over 2019-20).  
  • Transfer to states: The central government will transfer Rs 13,88,502 crore to states and union territories in 2021-22 (an annual increase of 10% over 2019-20).  This includes devolution of (i) Rs 6,65,563 crore to states, out of the centre’s share of taxes (an increase of 1%), and (ii) Rs 7,22,939 crore in the form of grants and loans (an increase of 21%).  In 2020-21, while devolution to states fell by 30% at the revised stage (compared to budget estimates), grants were higher by 26%.
  • GDP growth estimate: The nominal GDP is estimated to grow at a rate of 14.4% in 2021-22.  In Budget 2020-21, GDP was estimated to grow at 10%, which was revised to -13%.

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