India was able to achieve its fiscal deficit target for the financial year 2016–17. What was this fiscal deficit as a percentage of GDP for that year?

Introduction / Context:
Fiscal deficit is an important indicator of a government's financial health. It measures the gap between the government's total expenditure and its total non borrowing receipts. In India, the central government often sets a target for the fiscal deficit as a percentage of Gross Domestic Product (GDP) in the Union Budget. This question asks you to recall the fiscal deficit figure achieved for the financial year 2016–17 as a percentage of GDP.

Given Data / Assumptions:

• The question refers specifically to financial year 2016–17.
• India's central government had set a fiscal deficit target for that year.
• The achievement of that target was noted in official reports and economic surveys.
• Options include different percentages of GDP: 3.50%, 4.20%, 3.00% and 2.50%.

Concept / Approach:
Fiscal deficit as a percentage of GDP indicates how much the government is borrowing relative to the size of the economy. India has been following a path of fiscal consolidation, aiming to gradually reduce this ratio over time. For 2016–17, the Union Budget had targeted a fiscal deficit of 3.5 percent of GDP. Subsequent data confirmed that the government managed to meet this target. The other percentages listed either represent higher deficits from earlier years or lower figures planned for future consolidation and therefore do not match the specific achievement for 2016–17.

Step-by-Step Solution:
Step 1: Focus on the specific year: financial year 2016–17. Step 2: Recall from budgets and economic surveys that the target fiscal deficit for 2016–17 was 3.5 percent of GDP. Step 3: Note that official statements reported that this target was successfully achieved. Step 4: Match this figure to the 3.50% option among the choices given.

Verification / Alternative check:
You can cross check by remembering the sequence of fiscal deficit targets in India's consolidation path: higher deficits above 4 percent in earlier years, followed by a reduction to 3.9 percent of GDP in 2015–16, then 3.5 percent in 2016–17, with a further move towards 3.2 percent or around 3 percent in later years. This pattern makes 3.50% the correct figure for 2016–17, consistent with budget speeches and economic analysis of that period.

Why Other Options Are Wrong:
4.20%: This represents a higher fiscal deficit more typical of earlier years before the consolidation path was advanced, not the achieved figure for 2016–17.
3.00%: This lower figure was discussed as a medium term goal under fiscal responsibility legislation, but it was not the achieved deficit for 2016–17.
2.50%: This would represent an even tighter fiscal stance than envisaged in that period and does not match any standard target or achievement for 2016–17.

Common Pitfalls:
A common mistake is to mix up different years' fiscal deficit targets, especially since they are often close in value and expressed with one decimal place. Another pitfall is to assume that 3 percent is always the correct answer because it is often cited as a desirable limit in fiscal responsibility discussions. For exam questions, it is important to pay attention to the specific year mentioned and recall the exact figure associated with that year.

Final Answer:
For the financial year 2016–17, India's fiscal deficit was 3.50% of GDP, in line with the target.