Union Finance Minister Nirmala Sitharaman on Thursday announced in her interim Budget that the fiscal deficit is estimated to be 5.1% of the gross domestic product in the financial year 2024-’25.
India’s total borrowing during the next fiscal year has been estimated at Rs 14.13 lakh crore, Sitharaman said.
A fiscal deficit occurs when the government spends more money than it earns in a specific fiscal year.
Sitharaman stated that India’s projected fiscal deficit for the fiscal year 2023-’24 is 5.8%, slightly lower than the initial Budget estimate of 5.9%. She also mentioned the government’s commitment to fiscal consolidation, aiming for a fiscal deficit below 4.5% by the financial year 2025-’26.
Over the past years, there has been a significant surge in the fiscal deficit, escalating from 3.8% of the gross domestic product in the financial year 2019-’20 (revised estimate) to 9.5% in the subsequent fiscal (revised estimate). This increase was primarily influenced by the government’s spending on welfare amid the COVID-19 pandemic. For the ongoing financial year, the government projected total borrowings of Rs 15.4 lakh crore.
Before the Budget on January 29, the finance ministry projected that the real gross domestic product growth for the financial year 2024-’25 would approach 7%. The recent Budget marked Sitharaman’s sixth consecutive one as the finance minister.
