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Finance Minister Nirmala Sitharaman has said the projected fiscal deficit of 6.9 per cent for the current financial year is a ‘responsible’ target as the government has tried to ensure a balance between keeping up expenditure and being fiscally prudent. The minister also said the Rs 1 lakh crore loan for states will help in speeding up infrastructure development and capital expenditure. In her Budget speech on February 1, Sitharaman had said the revised fiscal deficit in the current financial year is estimated at 6.9 per cent of GDP as against 6.8 per cent of GDP projected in the budget estimates.

Sitharaman said ‘I don’t want anyone to think this (fiscal deficit estimate) is unusual. The pandemic was unusual and therefore 6.9 per cent is a responsible fiscal deficit. That is the kind of fiscal deficit … we have tried to do balancing between keeping up spending and being fiscally prudent’. Regarding giving Rs 1 lakh crore loan to states, she said the amount is being given to states because ‘we want to speed up infrastructure (development) and capital expenditure’. The amount is over and above what the states have been given under their borrowing limits and so it is not going to affect their borrowing limits.

She added when the states are being given the money it is more with the intention for several projects which they would want to complete. They can use this amount in total. She said ‘I thought it was the way in which we are supportive of the states, therefore we have given it. So, one it does not affect the FRBM, two, it does not give you (states) any interest burden, and three, you can use it for any project you want to do’. The Fiscal Responsibility and Budget Management (FRBM) Act provides for ensuring fiscal discipline.