Union Finance Minister Nirmala Sitharaman presents the Union Budget 2024-25 in the Lok Sabha, in New Delhi, Tuesday, July 23, 2024.
Credit: PTI Photo
Bengaluru: Finance Minister Nirmala Sitharaman cut the fiscal deficit target for the current financial year (FY25) compared to the interim Budget, and promised that the government will progressively try to bring down its debt levels.
In the Union Budget presented on Tuesday, the Budget Estimate (BE) for total expenditure for FY25 has been raised to Rs 48.2 lakh crore from Rs 47.6 lakh crore in the interim Budget. All of this increase has come in administrative expenditure, as the outlay for infrastructure (capital expenditure) is unchanged at Rs 11.11 lakh crore.
Credit: DH Illustration
The net tax revenue target for the year has come down slightly, compared to the interim Budget. However, BE for non-tax revenue has risen sharply, to Rs 5.46 lakh crore, from Rs 3.99 lakh crore in the interim Budget. This is primarily on the back of a record Rs 2.11 lakh-crore dividend, received from the Reserve Bank of India.
All this has enabled Sitharaman to reduce the fiscal deficit target for the year to Rs 16.1 lakh crore, or 4.9 per cent of GDP, from Rs 16.8 lakh crore, or 5.1 per cent of GDP.
"As a first indicator of the coalition government's policy platform, we think the Budget has signalled broad policy continuity, and indicated to markets that fiscal consolidation will remain intact under the coalition government,” said Shreya Sodhani, Regional Economist, Barclays.
Sitharaman said that the government aims to reach a deficit that will be below 4.5 per cent next year. “From 2026-27 onwards, our endeavour will be to keep the fiscal deficit each year such that the Central government debt will be on a declining path as percentage of the GDP,” she said.
Analysts hailed this direction. “We think this (the attempt to reduce debt) will give them greater flexibility to decide on an appropriate fiscal trajectory, based on domestic and global growth dynamics. Considering the Indian economy has been in a sweet spot lately, we believe pursuing counter-cyclical fiscal policy should help strengthen India's macroeconomic stability and create a foundation for strong medium-term growth,” said Tanvee Gupta Jain, Chief India Economist at UBS.
In fact, for the current financial year the gross borrowing target for the Centre has been reduced slightly to Rs 14 lakh crore from Rs 14.13 lakh crore.
Union Budget 2024 LIVE | Making a record for any Finance Minister, Nirmala Sitharaman presented her 7th consecutive Union Budget on July 23, 2024 under the Modi 3.0 government. This Budget brought tax relief for the middle class, while focusing on jobs through skilling, incentivising employers. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.