ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Debt, Deficit, and Fiscal Risks of the Union Budget for 2022–23

Budget-making requires a careful balancing of contradictory considerations, and such balancing becomes a formidable challenge in a flagging economy hit by a pandemic. This article focuses on the fiscal stance of the budget in terms of debt and deficit in 2021–22 and 2022–23.


With the COVID-19 pandemic hitting India in early 2020, the fiscal deficit of the union government almost doubled from `9,33,651 crore in 201920 to `18,18,291 crore in 202021. This deficit was more than double the budget estimate (BE) of `7,96,337 crore in 202021.1 With widespread morbidity, including numerous deaths and lockdowns for preventing the contagion of the virus, supply chains broke down and there was a major loss of business, jobs, and livelihoods. Between 201920 and 202021, the gross domestic product (GDP) at current prices declined by 3.0% from `2,03,51,013 crore to `1,97,45,670 crore; and, as a proportion of the GDP, the union governments fiscal deficit more than doubled from 4.6% to 9.4%.2 Large increases in fiscal deficit from the preceding year as well as BE, though not on such a large scale, had been seen before in 200809 and 201112 with the great recession (Figure 1, p 17).

The increase in fiscal deficit in 202021 was in line with what many countries were also doing and what the generally conservative International Monetary Fund (IMF) was asking countries to do in response to the COVID-19 pandemic (Gopinath 2020). In 202021, the policy stimulus cumulated to 15.7% of the GDP, including liquidity and other measures taken by the Reserve Bank of India (RBI).3 In 202021, whether the stimulus in general or the fiscal expansion in particular should have been even more than what the union government did, as some argue, is beyond the scope of this article. What the article focus on is the fiscal stance in terms of debt and deficit in 202122 and 202223.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here


To gain instant access to this article (download).

INR 59

(Readers in India)

$ 6

(Readers outside India)

Published On : 20th Jan, 2024

Support Us

Your Support will ensure EPW’s financial viability and sustainability.

The EPW produces independent and public-spirited scholarship and analyses of contemporary affairs every week. EPW is one of the few publications that keep alive the spirit of intellectual inquiry in the Indian media.

Often described as a publication with a “social conscience,” EPW has never shied away from taking strong editorial positions. Our publication is free from political pressure, or commercial interests. Our editorial independence is our pride.

We rely on your support to continue the endeavour of highlighting the challenges faced by the disadvantaged, writings from the margins, and scholarship on the most pertinent issues that concern contemporary Indian society.

Every contribution is valuable for our future.