Finance Minister Nirmala Sitharaman may aim to limit the fiscal deficit to 5.3 percent of India's gross domestic product (GDP) in the budget to be presented on February 1. A foreign brokerage firm made this estimate on Friday. BofA Securities said in a note that the government will be successful in fulfilling its commitment of bringing the fiscal deficit to 5.9 percent in the financial year 2023-24.
Target to reduce fiscal deficit
According to experts at the brokerage firm, despite election pressure, the Centre's fiscal deficit is seen being limited to 5.3 percent of the GDP for the financial year 2024-25. According to this, instead of cutting expenditure, the government will choose to stick to its strategy of reducing fiscal deficit by boosting growth with the help of capital expenditure.
This is how the strategy will be made
The brokerage firm said that the support given to the organized economy on the basis of digitization has helped the government in doing fiscal arithmetic by increasing tax revenue on one hand and reducing wasteful expenditure like subsidy expenditure on the other. The government has already committed to bring the fiscal deficit to 4.5 percent by financial year 2025-26. For this, a target has been set to make gradual reduction in it every year.
Estimated to be Rs 30.4 lakh crore
BofA Securities has estimated revenue receipts to increase by 10.5 percent to Rs 30.4 lakh crore. This will happen due to 10 percent increase in tax revenue and 14 percent increase in non-tax revenue. The possibility of a 'slight increase' in disinvestment income in the new financial year has also been expressed in this comment. According to this, the government's fresh market borrowing in the financial year 2024-25 will be Rs 11.6 lakh crore. During this period, considering the debt maturity of Rs 3.61 lakh crore, the gross market borrowing is estimated to be Rs 15.2 lakh crore.
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