Govt Aims to Improve Quality Spending, Cut Fiscal Deficit to 4.5% in FY26: Finmin Report
By: Admin | December 26, 2024
Categories: Finance Ministry News | 4 Min Read
The government is committed to improving the quality of public expenditure, strengthening social security, and achieving fiscal consolidation with a target of reducing the fiscal deficit to 4.5% of GDP by FY 2025-26, according to a Finance Ministry report.
Furthermore, Finance Minister Nirmala Sitharaman will present the Union Budget for FY 2025-26 on February 1, 2025.
Key Highlights from the Report
1. Fiscal Consolidation Goals
The government is on track to achieve the fiscal consolidation roadmap announced in the Budget 2021-22.
Specifically, the fiscal deficit is projected to fall below 4.5% of GDP by FY26, reflecting financial discipline and robust management.
2. Quality Spending & Social Security
In addition to fiscal consolidation, emphasis is placed on improving quality spending and reinforcing the social safety net for the poor.
As a result, these measures aim to strengthen India’s macroeconomic fundamentals and enhance financial stability.
3. Budget 2024-25 Context
The Union Budget for FY25 is being prepared amidst global uncertainties such as wars in Europe and the Middle East.
Despite these challenges, India remains one of the fastest-growing economies due to sound macroeconomic policies.
Receipts & Expenditure Estimates for FY25
Total Expenditure:
- Rs 48.21 lakh crore
Revenue Account:
- Rs 37.09 lakh crore
Capital Account:
- Rs 11.11 lakh crore
Moreover, the Effective Capital Expenditure is estimated at Rs 15.02 lakh crore, including grants for capital assets.
Gross Tax Revenue (GTR):
- Rs 38.40 lakh crore (11.8% tax-GDP ratio)
- Non-Debt Receipts: Rs 32.07 lakh crore
- Tax Revenue (Net to Centre): Rs 25.83 lakh crore
- Non-Tax Revenue: Rs 5.46 lakh crore
- Miscellaneous Capital Receipts: Rs 0.78 lakh crore
Fiscal Deficit
FY25 Budget Estimates (BE):
- Rs 16.13 lakh crore (4.9% of GDP)
H1 FY25 Actuals:
- Rs 4.75 lakh crore (29.4% of BE)
Thus, the fiscal deficit is within the projected range for the first half of FY25.
Financing the Fiscal Deficit
The fiscal deficit will be financed through multiple sources:
- Market Borrowings: Rs 11.13 lakh crore (G-Secs + T-Bills).
- Other Sources: Rs 5 lakh crore (e.g., NSSF, State Provident Fund, external debt, and drawdown of cash balances).
Consequently, this balanced approach will ensure adequate funding for developmental activities while maintaining fiscal stability.
Conclusion
India’s focus on quality expenditure and fiscal prudence reflects its resilience amid global challenges.
In conclusion, the government’s strategic approach aims to achieve fiscal stability while promoting inclusive growth and sustaining its position as a leading global economy.
For more updates on the Union Budget and fiscal policy, stay tuned.
