Budget 2024: FM Nirmala Sitharaman lowers fiscal deficit target to 4.9% of GDP for FY25

Finance Minister Nirmala Sitharaman unveild the Union Budget 2024 on July 23, marking the first budget under the Modi 3.0 administration. In her Budget speech, the FM lowered fiscal deficit to 4.9 percent of GDP, while keeping the market borrowing unchanged at Rs 14.13 lakh crore.

India's fiscal deficit stood at Rs 16.54 lakh crore in FY24 as against the budgetary target of Rs 17.86 lakh crore. With this, the fiscal gap has reached 95.3 percent of the budgetary target, data from the Comptroller General of Accounts.

The gross and net market borrowings through dated securities during 2024-25 are estimated at Rs 14.01 lakh crore and Rs 11.63 lakh crore, respectively. Both will be less than that in 2023-24, the FM said in her speech. "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 percent next year. The government is committed to staying the course," she said.

The Union government's fiscal deficit stood at 5.6 percent of GDP in FY24, below the revised estimate of 5.8 percent. The centre’s net tax receipts for FY24 were higher than projected at Rs 23.27 lakh crore, and 100.1 per cent of the year's target.

While announcing the Interim Budget for this fiscal year, Finance Minister Nirmala Sitharaman had trimmed the fiscal gap down to 5.8% from 5.9% of gross domestic product forecast earlier. Sitharaman 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.

The lower fiscal deficit target for 2024-25 was expected on hopes of strong tax collections and expenditure rationalisation, while a relatively lower spending on subsidies created space for the lower fiscal deficit target.