Govt confident of meeting FY24 fiscal deficit target, committed to lowering it to 4.5% by FY26: Ajay Seth

The government is confident of achieving its FY24 fiscal-deficit target of 5.9% and committed to lowering the fiscal deficit to 4.5% of GDP by FY26, department of economic affairs secretary Ajay Seth said on Wednesday.

Speaking on the sidelines of a national workshop on learnings from the G20 infrastructure working group, Seth said the Indian economy showed good growth momentum during Q2 (July-September) and strong growth was expected during the quarter. India's second-quarter GDP data is due on 30 November.

The Indian economy expanded 7.8% in the first quarter of the fiscal year on higher government and private capital expenditure and strong services growth. Real GDP at constant (2011-12) prices for the June quarter hit ₹40.37 trillion, marking a 7.8% expansion from ₹37.44 trillion a year ago, according to data from the Ministry of Statistics and Programme Implementation. Nominal GDP or GDP at current prices is estimated at ₹70.67 trillion, marking an 8% increase from ₹65.42 trillion in the year-ago quarter, the ministry said.

However, experts expect India's GDP growth to moderate in Q2 FY24 from levels achieved during the previous quarter. According to a Barclay's estimate, India’s GDP is set to expand by 6.8% year-on-year during Q2 FY24, slower than the 7.8% it achieved in Q1 FY24 but still showing robust sequential growth.

In August, Mint reported that the central government was unlikely to meet its divestment target of ₹51,000 crore for the current fiscal year. Despite the delay, the government expects higher non-tax revenues, including dividends from the Reserve Bank of India (RBI) and state-run banks, to offset any revenue shortfall from disinvestment and maintain the fiscal deficit target of 5.9% of GDP.