In India, the fiscal deficit target for the Financial Year 2017–18 was set at what percentage of Gross Domestic Product (GDP)?

Introduction / Context:
Fiscal deficit is a key indicator of how much the government is borrowing in a given year to finance its expenditure. Competitive exams in India frequently ask the exact fiscal deficit targets announced in Union Budgets because they reflect the government policy stance on consolidation, borrowing and macroeconomic stability. This question focuses on the fiscal deficit target for the Indian Financial Year 2017–18, expressed as a percentage of Gross Domestic Product (GDP). Knowing this figure helps learners connect economic policy, fiscal discipline and exam oriented facts.

Given Data / Assumptions:
- The context is the Indian Financial Year 2017–18.
- We are asked about the fiscal deficit target as a percentage of GDP.
- Options include 4.20%, 3.20%, 2.20% and 4.00%.
- We assume the question refers to the official Union Budget announcements for that year.

Concept / Approach:
Fiscal deficit is defined as total expenditure of the government minus the sum of its revenue receipts and non debt capital receipts. When expressed as a percentage of GDP it shows how large government borrowing is relative to the size of the economy. For several years India has followed a medium term plan to gradually reduce fiscal deficit. For 2017–18, the Union Budget set a specific target, which is a commonly tested static fact. The approach to answer the question is to recall or logically eliminate unlikely values based on recent trends in deficit reduction, which had brought the target close to 3% of GDP.

Step-by-Step Solution:
Step 1: Recall that in the period leading up to 2017–18 the government had been reducing the fiscal deficit gradually toward a target close to 3% of GDP. Step 2: Compare the options. Values like 4.20% and 4.00% are relatively high and do not match the policy of gradual consolidation in that phase. Step 3: A figure such as 2.20% appears too low for that period, because the government had not yet reached such a small deficit ratio. Step 4: The option 3.20% fits both the trend and the widely cited budget target for 2017–18. Step 5: Therefore, the correct answer is that the fiscal deficit target for 2017–18 was 3.20% of GDP.

Verification / Alternative check:
To verify, consider the general consolidation path: after some years of higher deficits above 4% following the global financial crisis and domestic slowdowns, the government moved to approximately 3.9%, then 3.5%, and then closer to around 3.2% of GDP. This trajectory is consistent with a policy goal under the Fiscal Responsibility and Budget Management framework. Since the number closest to this path in the choices is 3.20%, it provides an internal consistency check and supports the chosen answer.

Why Other Options Are Wrong:
4.20% is wrong because it is higher than the deficit levels targeted in that period and would reflect more expansionary borrowing than what was planned.
2.20% is wrong because such a low fiscal deficit has not been the target in recent decades and would have required far more aggressive fiscal tightening than was actually undertaken.
4.00% is wrong because it again overstates the deficit compared with the gradual consolidation path, which had already brought the figure below 4% before 2017–18.

Common Pitfalls:
A common mistake is to confuse actual realised deficits in earlier years with the formal budget target for a particular year. Another error is to mix up targets for different financial years, for example, assuming 3.50% when that applied to a different year. Learners should remember that the path moved in small steps and that 3.20% is specifically associated with Financial Year 2017–18. Writing down a small timeline of fiscal deficit targets while revising Indian economy can help avoid this confusion in the exam hall.

Final Answer:
For the Financial Year 2017–18, the fiscal deficit target in India was set at 3.20% of GDP.