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CORE SECTOR OUTPUT SHRINKS, FISCAL DEFICIT AT 83% OF TARGET

Focus: GS-III Indian Economy

Why in news?

The output of eight core sector industries shrank for the fourth straight month.

The Centre’s fiscal deficit for the first three months of fiscal 2020-21 is 83% of the budgeted target for the year.

Core Industries Index (CII)

  • The CII showed that the output for the month of June had shrank by 15%, which shows recovery compared to 22% fall in May.
  • Of the eight core sectors, the fertilizer industry was the only one which saw actual growth; however, it is lower than the May 2020 growth – reflects the positive outlook in the agriculture sector where a normal monsoon is leading to expectations of a bumper kharif crop.
  • The remaining industries showed contraction, with the steel sector continuing to remain the worst performer.
  • The energy sectors also showed negative growth, with coal, crude oil and natural gas production falling.

FY21 fiscal deficit

  • Given the government’s additional borrowing plans, both to meet stimulus spending and bridge the revenue shortfall as a result of the pandemic, the fiscal deficit may end up as high as 8% of GDP, far exceeding the budget’s goal of 3.5%.
  • The Union government has received less than 7% of budget estimates for the full year.
  • The Centre’s total expenditure for the quarter was almost 27% of budget estimates for the year, according to the report published by the Controller General of Accounts.
  • The Centre has already announced plans for additional borrowing that amounts to about 5.7% of GDP, and then on top of that, some more stimulus spending may be undertaken in the latter part of the fiscal year.
  • Looking at data for the last 20 years, year-on-year percentage growth for the first quarter – this year’s 40% growth in the first quarter capital expenditure is the highest

-Source: The Hindu

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