FM Nirmala Sitharaman used the escape clause to relax fiscal deficit target

FM Sitharaman invoked the escape clause to relax the fiscal deficit target for FY21.

Finance minister Nirmala Sitharaman, in her Budget speech, revised the fiscal deficit for FY20 to 3.8 per cent and pegged the target for FY21 to 3.5 per cent.

Sitharaman used the escape clause provided under the FRBM Act to allow the relaxation of target.


The clause allows the govt to relax the fiscal deficit target for up to 50 basis points or 0.5 percent.

It was being speculated that the finance minister will use this escape clause to chart a new glide path for achieving the fiscal goals. For FY20, the fiscal deficit target was budgeted at 3.3 per cent last year but muted tax collections cast a shadow on governemnt finances raising fears that the government will breach the fiscal deficit target.