Budget: Fiscal deficit pegged at 5.9% of GDP for 2023-24
1 min read . Updated: 01 Feb 2023, 12:46 PM IST
Premium- The fiscal deficit target for the current fiscal was retained at 6.4% of GDP, despite a spike in expenditure on the back of better-than-expected nominal GDP
New Delhi: Sticking to the path of fiscal consolidation, finance minister Nirmala Sitharaman on Wednesday pegged the gap between the Centre’s revenue and expenditure at 5.9% of gross domestic product (GDP) for the financial year 2023-24.
The fiscal deficit target for the current fiscal was retained at 6.4% of GDP, despite a spike in expenditure on the back of better-than-expected nominal GDP, which is the denominator.
“We have adhered to the fiscal consolidation path… aim to bring fiscal deficit to 4.5% of GDP by 2025-26 with a fairly steady decline. For 2023-24, we have set a target of 5.9% of GDP," said Sitharaman during her budget speech.
Mint had reported earlier that the Union Budget will retain the fiscal deficit for the current fiscal at 6.4% of GDP and contain it to below 6% of GDP in 2023-24, sticking to the fiscal consolidation roadmap.
Sitharaman proposed increasing total expenditure to ₹45 trillion in 2023-24 from ₹41.9 trillion as per the revised estimate. Meanwhile, it has estimated total receipts at ₹27.2 trillion compared to ₹24.3 trillion.
Sitharaman proposed to raise the capital expenditure target by 33% to ₹10 trillion for the next fiscal starting 1 April, which is 3.3% of the country's economic output, which is expected to act as a multiplier to boost economic growth.
The finance minister also rationalized personal income tax to support consumption by the middle class to shore up domestic demand and consumption.
The move is consistent with the Economic Survey commentary, which said that the government is on course to meet the fiscal deficit target of 6.4% of GDP in 2022-23.
“We estimate the total spending in the current fiscal to exceed the Budget Estimate (BE) by Rs. 2.3 trillion, lower than the net cash outgo announced in the first supplementary demand for grants (Rs. 3.3 trillion), after taking into account our expectations of expenditure savings by ministries/departments. This implies a modest YoY rise of 7% in total spending in Q4 FY2023,: said Aditi Nayar, chief economist, ICRA Ltd.
