In presentation of the Union Budget for 2024-25, Finance Minister Nirmala Sitharaman has set a fiscal deficit target of 4.9% of Gross Domestic Product (GDP). This marks a decrease from the 5.1% target outlined in the Interim Budget on February 1.
For the fiscal year 2023-24, the initial fiscal deficit target was set at 5.9% of GDP but was later revised down to 5.8%. The fiscal deficit, which reflects the gap between total revenue and total expenditure, indicates the government’s borrowing requirements.
Sitharaman emphasized the government’s commitment to fiscal consolidation, aiming to reduce the fiscal to below 4.5% of GDP by the financial year 2025-26. “The fiscal consolidation path announced in 2021 has been beneficial for our economy, and we aim to achieve a deficit below 4.5% next year,” she stated.
Looking further ahead, Sitharaman assured that from 2026-27, the goal would be to ensure the central government’s debt as a percentage of GDP declines annually. “The government is dedicated to maintaining this trajectory, and our endeavor will be to keep the fiscal deficit on a downward path,” she added.