In India, what was the fiscal deficit as a percentage of GDP for the financial year 2016 to 2017, a target that was successfully achieved?

Introduction / Context:
Fiscal deficit is a key indicator of the financial health of a government. It measures the gap between total government expenditure and total non borrowing receipts in a given financial year. This question asks about the fiscal deficit of India in the financial year 2016 to 2017, expressed as a percentage of gross domestic product, which is often used to assess how sustainable government borrowing is relative to the size of the economy.

Given Data / Assumptions:

• The financial year in question is 2016 to 2017.
• We look at the fiscal deficit of the central government as a percentage of GDP.
• The options present several possible percentages, including the planned target.
• It is known from official data that the government was able to meet its deficit target for that year.

Concept / Approach:
The fiscal deficit as a percentage of GDP is calculated as: fiscal deficit divided by GDP multiplied by 100. For the financial year 2016 to 2017 in India, the official budget had set a target of 3.5 percent of GDP for the fiscal deficit. At the end of the year, the actual fiscal deficit also stood at around 3.5 percent of GDP, indicating compliance with the target. Therefore, among the options given, 3.50 percent is the correct figure.

Step-by-Step Solution:
1. Recall the definition of fiscal deficit as total expenditure minus total non debt receipts. 2. Recognise that the question asks specifically for the ratio of this deficit to GDP in 2016 to 2017. 3. From government budget documents, note that the announced target for that year was 3.5 percent of GDP. 4. At the time of review, data showed that the government succeeded in keeping the deficit at this target level. 5. Therefore select 3.50 percent of GDP as the correct answer.

Verification / Alternative check:
You can cross check by remembering the sequence of fiscal consolidation efforts in India. In earlier years the deficit was higher, and under the fiscal responsibility framework the government gradually reduced the deficit ratio. For 2015 to 2016 the deficit was around 3.9 percent of GDP, and for 2016 to 2017 the target was lowered to 3.5 percent, which was achieved. This pattern helps you eliminate higher and lower values in the options.

Why Other Options Are Wrong:
Option B: 4.20 percent would have implied a widening of the deficit instead of consolidation and does not match the official data for that year.
Option C and D: 3.00 percent and 2.50 percent would be stricter targets than those actually set and met in 2016 to 2017, though such values have been discussed for future years.
Option E: 5.00 percent is much higher than the consolidation path and was more typical of earlier periods with larger deficits.

Common Pitfalls:
Students often mix up figures from different financial years, especially because deficit targets are adjusted gradually. Another mistake is confusing revenue deficit with fiscal deficit, or mixing up central government figures with combined state and central deficits. Always pay attention to the exact year and the specific indicator being asked in the question.

Final Answer:
3.50 percent of GDP