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The government is focusing on increasing public spending, strengthening social security, and reducing the deficit to 4.5 percent of GDP by FY26, according to a finance ministry report.
Finance Minister Nirmala Sitharaman will present the Budget for the financial year 2025-26 in Parliament on 1 February.
The Union Government remains committed to the fiscal consolidation measures outlined in the FY 2021-2022 Budget, with the aim of bringing the deficit below 4.5 percent of GDP by FY 2025-2026, according to the finance ministry’s mid-year statement. the receipt and use of funds and the failure to meet the requirements of the Fiscal Responsibility and Budget Management Act, 2003.
The review reviewed any deficiencies from the Fiscal Responsibility and Budget Management Act, 2003. The statement was tabled in the Lok Sabha last week.
The report shows that the aim will be to increase the quality of public funds while strengthening social security for vulnerable groups. This strategy is expected to improve the fundamentals of the country’s economy and maintain financial stability.
The statement shows that the 2024-2025 Budget was drawn up amid global uncertainty, including ongoing conflicts in Europe and the Middle East. However, India’s strong economic policies have protected the country from the global financial crisis, allowing it to continue to grow and maintain its currency.
“It has also contributed to the country’s continued growth and financial integration. As a result, India retains pride of place as one of the fastest growing economies in the world. However, growth risks remain,” he said.
The total expected expenditure for FY 2024-25 is around Rs 48.21 lakh crore, of which Rs 37.09 lakh crore has been allocated for capital expenditure and Rs 11.11 lakh crore for capital expenditure, according to the Budget Estimate (BE). In the first half of FY25, the government spent Rs 21.11 lakh crore, about 43.8 percent of BE.
Including capital expenditure, the capital expenditure (capex) is estimated at Rs 15.02 lakh crore. Gross Tax Revenue (GTR) is expected to reach Rs 38.40 lakh crore, giving a tax to GDP ratio of 11.8%.
The total non-debt receipts of the Center were about Rs 32.07 lakh crore, including Rs 25.83 lakh crore from total taxes, Rs 5.46 lakh crore from non-tax revenues, and Rs 0.78 lakh crore from miscellaneous income.
Based on this estimate, the fiscal deficit for FY 2024-2025 is expected to be Rs 16.13 lakh crore, or 4.9% of GDP. In the first half of FY25, the deficit stood at Rs 4.75 lakh crore, or about 29.4 percent of the full-year estimate.
The deficit is expected to be met through Rs 11.13 lakh crore raised in the market (Government Securities and Treasury Bills) and the remaining Rs 5 lakh crore through other sources such as National Small Savings Fund (NSSF), State Provident Fund, abroad. debt, and the withdrawal of the balance.
