The COVID-19 pandemic and the resultant lockdown(s) have undoubtedly caused massive disruptions in business around the world. The Indian GDP saw one of its worst contractions of 23.9% in the first quarter of the fiscal year (FY) 2021. However, the economic survey and various other statistics have shown a V-shaped recovery of the economy. The real GDP in FY21 is expected to contract by 7.7%. The GDP growth in the next fiscal year is expected at 11%.
The Union Budget seems to have incorporated most of the suggestions laid out in the economic survey. It has focused on supporting the economy and boosting growth through higher capital expenditure, big infrastructure push and higher outlay for the healthcare sector. Higher expenditure will be met through asset monetisation, aggressive disinvestment and much higher market borrowing. The government has set realistic targets for fiscal deficit numbers for FY21 to 9.5% of the GDP. It further estimates a steady recovery and proposes to gradually bring down the fiscal deficit to below 4.5% by FY 2025-26.