India is aiming to continue on its fiscal consolidation path in the next financial year, after bettering its fiscal deficit target for the current fiscal.
The Union government will target a fiscal deficit of 5.1% for FY25, with gross borrowings pegged at Rs 14.13 lakh crore, Finance Minister Nirmala Sitharaman announced in her interim budget 2024 speech on Thursday.
The country’s fiscal deficit is expected to settle at 5.8% in the current fiscal, better than the budget estimate of 5.9%. Sitharaman reaffirmed that the government would continue on the path of fiscal consolidation, reaching a fiscal deficit below 4.5% by FY26.
Fiscal deficit had risen from 3.8% of the gross domestic product in FY20 to 9.5% in FY21 due to increased development and welfare-related expenditures during the Covid-19 pandemic.
To finance the fiscal deficit in 2024–25, the gross market borrowings are estimated at Rs 14.13 lakh crore. The government had estimated gross borrowings at Rs 15.4 lakh crore in the current fiscal.
FY25 net borrowing is seen at Rs 11.75 lakh crore.
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