The government said on Friday it has declared a surplus in the current fiscal year, marking the first time in the country’s modern history that it has not ran a deficit.
The government, which has been grappling with the fallout of the global financial crisis, said it had managed to achieve the deficit target by reducing the deficit to 3.75 per cent of gross domestic product (GDP) in FY17 from a peak of 4.6 per cent.
The deficit target is a target set by Finance Minister Arun Jaitley in the 2017-18 budget.
The government says that it is working to achieve this goal, as it aims to keep the budget deficit below 3 per cent, and achieve a surplus by September.
The surplus is also expected to bring the country closer to its fiscal targets of 1.5 per cent and 2 per cent respectively.
However, it will have a major impact on the economy as the government’s surplus targets are based on the previous fiscal, when the economy contracted by 2.4 per cent in the last fiscal.
The economy is expected to contract by 3.5-4 per the fiscal 2019-2020 period, according to the Reserve Bank of India (RBI).
The government’s deficit target for 2019-20 is expected at 1.3 per cent for the next fiscal.
This is the first fiscal that the government has failed to meet.
Earlier this month, the finance ministry said that it had cut the deficit by a record 3.1 per cent this year.
The finance ministry, which is responsible for forecasting the economy and managing the government finances, had earlier forecast a deficit of 3.2 per cent that year.
In the first two quarters of this fiscal, the government had forecast a surplus of 3 per-cent of GDP, but the deficit grew to 4.3-4.5 percent by the end of the financial year.
The fiscal deficit, which the government estimates at 4.2-4,7 per cent by the financial end of 2019, has since grown to 6.6-7.1 percent.
The budget deficit in the year ending March 31, 2018, was 5.3 percent of GDP.
The growth of the budget deficits was slower in 2019-18 than the previous year, when it grew by 3 per quarter.
But in the next two quarters, it had grown by 7 per quarter, and by 10 per quarter by the first half of 2020.
In 2020-21, the deficit in 2019 was revised down to 3 per per cent from 3.4 percent in 2019.
In 2021-22, the surplus was revised up to 4 per cent but then it grew to 7 per cent to 3,9 per cent year-on-year in 2022-23.