Union Budget 2021-2022

Unveiled the Union Budget 2021-2022 on February 1, amid the ongoing COVID-19 pandemic and related economic shock. Though it increases the fiscal deficit significantly compared to the pre-pandemic levels, we believe it presents a credible policy framework for the coming fiscal year and timely shift from short-term disaster relief to medium- term economic recovery.
The FY22 budget maintains the government’s expansionary fiscal policy, with a headline fiscal deficit of 6.8 percent in FY22, well above the baseline fiscal consolidation targets of between 3.0 and 3.5 percent though also well below the outlier deficit of 9.5 percent realized during this past year. The government will finance this deficit through a sharp increase in market borrowing, up 54 percent in volume terms from pre-pandemic levels.