Budget 2024: FM Bets For Fiscal Consolidation Path, Reducing Govt Deficit Below 4.5%

Interim Budget 2024: The government continues to be on the path of fiscal consolidation to reduce the fiscal deficit to 4.5 per cent in 2025-26, said Finance Minister Nirmala Sitharaman while presenting the interim budget.

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Sitharaman hiked capital expenditure by 11 per cent for the next fiscal to sustain the economic growth rate while trimming the deficit in a reform-oriented interim budget trimming the fiscal deficit for this financial year to 5.8 per cent, from the budgeted 5.9 per cent of GDP, and further lowering to 5.1 per cent in the next fiscal.

“We continue on the path of fiscal consolidation, as announced in my Budget Speech for 2021-22, to reduce the fiscal deficit below 4.5 per cent by 2025-26,” Sitharaman said.

The revenue receipts for the current fiscal at Rs 30.03 lakh crore are expected to be higher than the Budget Estimate, reflecting strong growth momentum and formalisation in the economy.

Capex Raised

Sitharaman announced that the country’s capital spending for 2024-25 has been raised 11 per cent to Rs 11.11 lakh crore, or 3.4 per cent of GDP.

She said the tripling of capex in the last four years has resulted in a multiplier effect on economic growth and employment generation.

Fiscal Deficit

FM Nirmala Sitharaman said the fiscal deficit for 2024-25 is estimated at 5.1 per cent of GDP against 5.8 per cent in the current financial year.

Sitharaman said tax receipts for 2024-25 are projected at Rs 26.02 lakh crore.

She informed that the fiscal deficit in FY24 is expected at 5.8 per cent of GDP, down from 5.9 per cent estimated earlier.

The fiscal deficit touched Rs 9.82 lakh crore or 55 per cent of the annual budget target at December-end 2023.

In the corresponding period last year, the deficit was 59.8 per cent of the budget estimates for 2022-23.

Govt Will Raise Rs 14.13 lakh

The government will raise Rs 14.13 lakh crore from the market by issuing dated securities in 2024-25.

The government resorts to market borrowings to bridge the gap between expenditure and revenue.

The government mobilised a gross amount of Rs 5.77 lakh crore by issuing dated securities in the current financial year up to July 31, 2023.

Sitharaman also said 50-year interest-free loans of Rs 75,000 crore to be extended to states to realise the dream of a developed India, and added that every challenge of pre-2014 was overcome through our economic management.

Stating that every challenge of the pre-2014 era was overcome through economic management and governance, she said the government, in its July budget, will present a detailed roadmap to make India a developed country.

“Guided by the principle ‘reform, perform, and transform’, the Government will take up next-generation reforms, and build consensus with the states and stakeholders for effective implementation,” Sitharaman said in her speech.