NEW DELHI, Dec 25: The government is dedicated to enhancing the quality of public spending, strengthening the social security framework, and reducing the fiscal deficit to 4.5% of GDP by FY26, according to a document from the finance ministry.
Finance Minister Nirmala Sitharaman is set to present the Budget for 2025-26 in Parliament on February 1.
The Union Government has reaffirmed its commitment to the path of fiscal consolidation, as laid out in the FY 2021-22 Budget, aiming to bring the fiscal deficit below 4.5% of GDP by FY 2025-26. This information was provided in the finance ministry’s half-yearly review of government receipts and expenditure trends, which also addresses compliance with the Fiscal Responsibility and Budget Management Act, 2003.
These statements were presented in the Lok Sabha last week.
“The focus will be on enhancing the quality of public expenditure while simultaneously fortifying the social security net for marginalized and vulnerable populations. This strategy aims to further solidify the country’s macroeconomic fundamentals and promote overall financial stability,” the document stated.
According to the review, the Budget for 2024-25 was drafted amid global uncertainties stemming from ongoing conflicts in Europe and the Middle East.
India’s robust macroeconomic fundamentals have helped insulate the nation from global economic fluctuations.
“This has enabled India to pursue growth alongside fiscal consolidation. Consequently, India continues to be recognized as one of the fastest-growing economies globally, although there are still risks to growth,” it noted.
Total expenditure is projected at approximately Rs 48.21 lakh crore, with revenue and capital expenditures estimated at around Rs 37.09 lakh crore and Rs 11.11 lakh crore, respectively, as per the Budget Estimate (BE) for 2024-25.
For the first half of FY25, total expenditure stood at Rs 21.11 lakh crore, which accounts for about 43.8% of the BE.
After factoring in grants for capital asset creation, effective capital expenditure (Capex) was anticipated to be Rs 15.02 lakh crore.
Gross Tax Revenue (GTR) was estimated at roughly Rs 38.40 lakh crore, reflecting an implied tax-to-GDP ratio of 11.8%.
Total non-debt receipts for the Centre were projected at about Rs 32.07 lakh crore, consisting of net tax revenue of around Rs 25.83 lakh crore, non-tax revenue of about Rs 5.46 lakh crore, and miscellaneous capital receipts of Rs 0.78 lakh crore.
With these estimates of receipts and expenditures, the fiscal deficit was estimated at around Rs 16.13 lakh crore in BE 2024-25, equivalent to 4.9% of GDP.
During the first half of FY25, the fiscal deficit is projected at Rs 4.75 lakh crore, representing approximately 29.4% of the BE.
The fiscal deficit is planned to be financed by raising Rs 11.13 lakh crore from the market (government securities + treasury bills) and the remaining Rs 5 lakh crore from other sources, including the NSSF, state provident fund, external debt, and cash balance drawdown, among others. (PTI)
