The government may need to relax its fiscal deficit target of 3.3 percent for FY20 in order to revive the economic growth, Krishnamurthy Subramanian, chief economic adviser, said in the Economic Survey 2020, as the nation faces its worst economic slowdown in a decade.

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The economic survey has not provided any projection for the fiscal deficit. Economists believe that is around 3.8 percent.

Pronab Sen, former chief statistician, said expansion in the fiscal policy is unlikely without some breach of the fiscal deficit target.

“But I don’t think that’s the issue. The issue is that is it saying anything about what the true fiscal deficit is. All it is saying that it is going to breach,” he said.

“If it’s going to breach only because of the giveaways that have happened in the last 3 months or so then it means you are still continuing to hide the problem under the carpet,” Sen noted.

In 2019-20, the fiscal deficit was budgeted at Rs 7.04 lakh crore or 3.3 percent of GDP, as compared to Rs 6.49 lakh crore or 3.4 percent of GDP in 2018-19.

The survey believes uptick in growth of cumulative GST collections in October, November and December last year may contain fiscal deficit at the budgeted target.

Good and Services Tax (GST) collections, the biggest component of indirect taxes, grew by 4.1 percent during the April-November 2019 period.

The Economic Survey 2020 forecast India's GDP growth to be in the range of 6 percent to 6.5 percent in the fiscal year 2020-21.

The Survey said that the uptick in second half of 2019-20 would be mainly due to 10 positive factors like picking up of NIFTY for the first time this year, an upbeat secondary market and higher FDI flows.

A build-up of demand pressure, positive outlook for rural consumption, a rebound of industrial activity, steady improvement in manufacturing, growth in merchandise exports, a higher build-up of foreign exchange reserves and positive growth rate of GST revenue collection may also support growth.

(With inputs from agencies)

First Published:Jan 31, 2020 3:39 PM IST