Govt aims to enhance quality spending, reduce fiscal deficit to 4.5% in FY26: Finance Ministry report 

According to a report by the Ministry of Finance, the government is focused on improving the quality of public spending, strengthening the social safety net and reducing the fiscal deficit to 4.5 percent of GDP.

Finance Minister Nirmala Sitharaman will present the budget for the financial year 2025-26 in the Parliament on February 1.

The Union government remains committed to the fiscal consolidation path outlined in the 2021-22 budget, aiming to bring the fiscal deficit below 4.5 percent of GDP by 2025-26, according to the Finance Ministry’s semi-annual review of revenue and expenditure trends and deviations in the fulfillment of the government’s fiscal obligations. Accountability and Budget Management Act, 2003

This review also examined the 2003 Any deviation from the Fiscal Responsibility and Budget Management Act The statements were tabled in the Lok Sabha last week.

The report emphasizes that the emphasis will be on improving the quality of public spending while strengthening the social security system for vulnerable groups.This approach is expected to enhance the country’s macroeconomic fundamentals and maintain overall financial stability.

The announcements noted that the 2024-25 budget was formulated amid global uncertainties, including ongoing conflicts in Europe and the Middle East. However, India’s strong macroeconomic fundamentals have shielded the country from global economic shocks, allowing it to continue growing while maintaining fiscal discipline.

“It has also helped the nation pursue growth through fiscal consolidation. As a result, India maintains its pride as one of the fastest growing economies in the world. However, risks to growth remain,” the report said.

The total estimated expenditure for FY 2024-25 is around Rs 48.21 lakh crore out of which Rs 37.09 lakh crore is earmarked for revenue and Rs 11.11 lakh crore for capital expenditure as per Budget Estimates (BE) in the first half of FY25 spent Rs 21.11 lakh crore which is approximately 43.8 percent of BE.

Effective capital expenditure (capex) while including grants for creation of capital assets was projected at Rs 15.02 lakh crore.Gross tax revenue (GTR) was estimated at Rs 38.40 lakh crore, giving a tax-GDP ratio of 11.8 percent.

The Centre’s total non-debt receipts were estimated at Rs 32.07 lakh, comprising of Rs 25.83 lakh net tax receipts, Rs 5.46 lakh non-tax receipts and Rs 0.78 lakh miscellaneous capital receipts.

Based on these estimates, the budget deficit for FY 2024-25 is projected at Rs 16.13 lakh crore, or 4.9 per cent of GDP.The fiscal deficit for the first half of FY25 is estimated at Rs 4.75 lakh crore, or about 29 per cent of the full-year estimate. 4 percent.

The fiscal deficit is planned to be financed through Rs 11.13 lakh crore raised from the market (government securities and treasury bills) and the remaining Rs 5 lakh crore from other sources such as National Small Savings Fund (NSSF), State Provident Fund, external : debt and withdrawal of cash balances.