Informist, Thursday, Apr 25, 2024

--Fin min source: Have comfortably met FY24 fiscal gap aim

--CONTEXT: Revised FY24 fiscal deficit target was 5.8% of GDP

--Fin min source: Ended FY24 within revised Budget targets

By Priyasmita Dutta and Sagar Sen

NEW DELHI – The government has comfortably met its fiscal deficit target of 5.8% of GDP for the fiscal year ended March, a top finance ministry official said today. The target had been cut by 10 basis points in the revised estimate, detailed in the Interim Budget for 2024-25 (Apr-Mar) on Feb 1. The government is likely to release the fiscal estimates for the month and year ended March on May 31.

"We have stuck to our targets... Have closed the financial year within the targets we had set for ourselves," the official told Informist. The government had initially set a fiscal deficit target of 5.9% of GDP for 2023-24, but after taking stock of its accounts before the Interim Budget, it decided to lower the aim.

There were doubts over the government meeting its fiscal gap target as the nominal GDP for 2023-24 came lower than the earlier estimate in absolute terms, which could push up the deficit to 5.9% of GDP.

The National Statistical Office has projected India's nominal GDP to grow 9.1% in 2023-24, in its second advance estimate for GDP. The nominal GDP was assumed to be 8.9% in the Budget. In absolute terms, the second advance estimate has projected nominal GDP at 293.90 trln rupees in 2023-24, compared with 296.58 trln rupees projected in the Budget. Although the nominal GDP is projected to grow faster than the previous projection, it will be lower in absolute terms because of revisions in earlier years.

For the current fiscal year, the finance ministry has pegged the fiscal deficit at 5.1% of GDP. This is in line with the government's fiscal consolidation roadmap, under which it aims to bring down the deficit to 4.5% by 2025-26.

Asked whether there was a further scope for the government to cut its fiscal deficit aim for the current financial year in the full Budget that will be presented after the elections, the official said it would be a tall task. "To cut it further is tough... so unlikely. Besides, it is too early to gauge how the financial year will progress," the official said.

The government's fiscal deficit for the first 11 months of the financial year ended March was 15.01 rupees, up 3.3% from 14.54 trln rupees reported a year ago. For the 11 months, the fiscal deficit accounted for 86.5% of the 2023-24 aim. End

Edited by Ranjana Chauhan

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