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Informist, Tuesday, Dec. 24, 2024

 

NEW DELHI – The government will focus on improving the quality of public spending in the next financial year starting April, while simultaneously pursuing fiscal consolidation, the finance ministry has said. The government aims to lower the fiscal deficit to less than 4.5% of GDP in FY26, as was first announced in the Union Budget for FY22, the ministry said in a half-yearly review report.

 

"The thrust will be on improving the quality of public spending, while at the same time, strengthening the social security net for the poor and needy. This approach would help further strengthen the nation's macroeconomic fundamentals and ensure overall financial stability," the ministry said in the 'Statement on Half Yearly Review of the Trends in Receipts and Expenditure in relation to the Budget'.

 

The government has set a fiscal deficit target of 4.9% of GDP for the current financial year, lower than the 5.6% of GDP achieved in FY24. Informist had reported earlier this month that the government could lower its FY25 fiscal deficit by 10-20 basis points below the Budget target of 4.9% of GDP.

 

According to latest data, the fiscal deficit was INR 7.51 trillion during Apr-Oct, down 6.6% on year. The fiscal deficit for Apr-Oct accounted for 46.5% of the full-year target of INR 16.133 trillion set in the Budget. Total revenue rose 8.3% on year to INR 17.23 trillion during Apr-Oct, while the total expenditure was INR 24.74 trillion, up 3.3%.

 

Since the Budget for FY25 was presented in July, global headwinds and associated risks are yet to abate. "The global situation has become even gloomier due to further escalation of conflict among a set of countries. Given the prevailing global economic and security environment, it is necessary for the government to retain fair degree of flexibility in conducting its fiscal policy so as to be able to respond to any fallout from adverse global events," the ministry said.

 

India has remained cushioned from the vagaries afflicting the global economy, thanks to its sound macroeconomic fundamentals, the ministry said. "It has also helped the nation pursue growth with fiscal consolidation. As a result, India retains its pride of place as one of the fastest growing economies in the world. However, risks to growth still remain."  End

 

Reported by Shubham Rana

Edited by Avishek Dutta

 

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