NEW DELHI: While presenting the Union Budget on Tuesday, the Union Finance Minister Nirmala Sitharaman reduced India's fiscal deficit target for the current financial year FY25 from the 5.1 per cent of GDP projected in the interim budget in January to 4.9 per cent, attributing this adjustment to careful expenditure management and strong revenue receipts and further said that the government aims to reach a 4.5 per cent fiscal deficit in 2025-26.

According to the finance minister gross and net market borrowing is pegged at Rs 14.01 lakh crore and Rs 11.63 lakh crore, respectively, in FY25. While the net tax receipts are estimated at Rs 25.83 lakh crore in FY25 while the total receipts are pegged at Rs 32.07 lakh crore, the total expenditure is estimated at Rs 48.21 lakh crore in FY25, she added.

While announcing the interim budget for this fiscal year in January, FM Sitharaman had trimmed the fiscal gap down to 5.8% from 5.9% of the gross domestic product forecast earlier, at the same time she had also pegged the fiscal deficit target at 5.1% for the next fiscal year, while India keeps aiming to reach a fiscal deficit level below 4.5 per cent of the GDP by 2025-26.

While presenting the budget in the Parliament she said, "The fiscal consolidation path announced by me in 2021 has served our economy very well, and we aim to reach a deficit below 4.5% next year. The Government is committed to staying the course," and further said that a newer way to benchmark fiscal management would be considered in the forthcoming years. "From the financial year 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 a percentage of GDP," she added.

The central government's intent to rapidly reduce its fiscal deficit target which had ballooned to 9.2 per cent in 2020-21 during the coronavirus pandemic has been consistent with the fiscal consolidation. The reduced fiscal deficit target for 2024-25 was anticipated due to expectations of strong tax revenues and efficient expenditure management. Additionally, lower spending on subsidies allowed for a more modest fiscal deficit target. Dwelling on this FM Sitharaman said, "The fiscal consolidation path announced by me in 2021 has served our economy very well, and we aim to reach a deficit below 4.5 per cent next year. The government is committed to staying the course."