Combined Fiscal Deficit of Centre, States May Go Up to 14% in FY21: C Rangarajan

The combined fiscal deficit of states and the centre during the current year may go up to 14 per cent against the mandated level of six per cent, former Reserve Bank Governor C Rangarajan said on Thursday. Speaking at a programme organised by the ICFAI Business School here, the former Chairman of the Economic Advisory Council to the Prime Minister said banks should neither be timid nor adventurous while lending as the loans of today should not become NPAs of tomorrow.

“So therefore we are essentially talking about 13.8per cent or 14 per cent of the GDP (gross domestic product) as the overall fiscal deficit of the states and the Centre. It is obvious this is twice the mandated level. The mandated level for both the Centre and state is 6 per cent of the GDP. It is twice or even more than twice of the estimated figure,” he said. According to him, the fiscal deficit may further go if the government decides to go in for additional borrowings to meet GST compensation part.