As the nationwide lockdown hit economic growth and choked revenues, the Centre increased its gross market borrowing estimates for the current financial year to Rs 12 lakh crore from the Budget estimate of Rs 7.8 lakh crore. The increase in borrowing would lead to a higher fiscal deficit of 5.5 per cent for 2020-21.

In the Budget, Finance Minister Nirmala Sitharaman had projected a fiscal deficit target of 3.5 per cent of GDP, estimated at projected Rs 224 lakh crore for the fiscal year. Analysts and economists said that the move was on expected lines.

“The estimated gross market borrowing in 2020-21 will be Rs 12 lakh crore in place of Rs 7.8 lakh crore as per BE 2020-21,” the Finance Ministry, said, adding that the revision in borrowings was due to the spread of the Covid-19 pandemic.

The industry has also sought a stimulus package from the government to tide over the economic crisis that has emerged from the spread of Covid 19.

"At this point, we should not worry too much about fiscal deficit numbers, we need to provide support to our industry so that the economic impact of the lockdown can be handled," Soumya Kanti Ghosh, chief economic adviser, State Bank of India Group, told IN.

In a statement, the Confederation of Indian Industry (CII) said that the lockdown has come at a huge economic cost. The industry body has underlined the need to provide an immediate “substantive” stimulus package of Rs 15 lakh crore which would translate into 7.5 per cent of GDP.

“With economic activities being restricted for over 50 days now, the negative impact on the economy is expected to be even more significant than what we had earlier anticipated. This needs to be offset by a large fiscal stimulus so that jobs and livelihoods are protected,” said CII president Vikram Kirloskar.

Meanwhile reports have indicated that the government may take the ordinance route to provide for the additional borrowing since it has already used the escape clause which allows slippage of half a percentage point in financial year under the Fiscal Responsibility and Budget Management Act..