Fiscal deficit target of 6.4% Met: Comes to Rs. 17.33 lakh crore
The Union Government has been successful in meeting its FY23 fiscal deficit target of 6.4% of GDP. What does this mean? The Centre had kept its fiscal deficit target at 6.4% of the GDP and has managed to achieve that according to official data.
This aligns with the fiscal glide path envisioned by Finance Minister Nirmala Sitharaman in the Union Budget for FY24 that was presented on February 1 this year.
India's FY23 fiscal deficit narrows to 6.4%, meets budgeted target https://t.co/XQ35Qnm7Dl
— Vijay (@centerofright) May 31, 2023
According to the Fiscal Responsibility and Budget Management (FRBM) Act, “The fiscal deficit of the Union Government, estimated at 9.2% of GDP during the pandemic year FY 2020-21, moderated to 6.7% of GDP in FY 2021-22 and is budgeted to decline further to 6.4% of GDP in FY 2022-23.”
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Sitharaman also talked about how the government is aimed at making this deficit even lower in the future, The aim is to see a deficit that falls below 4.5% by 2025-26.
The lowered fiscal deficit points that fiscal consolidation is happening. If this continues, we can get to 5.9% of GDP this year.
Fiscal deficit well within estimates. GDP growth overshooting estimates. Kudos @narendramodi @nsitharaman
— D.Muthukrishnan (@dmuthuk) May 31, 2023
What is the fiscal deficit?
A fiscal deficit is nothing but the difference between the total revenue and total expenditure of the government. It indicates the total borrowings needed by the government.
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The fiscal deficit is calculated as a percentage of the Gross Domestic Product (GDP).
According to the Controller General of Accounts (CGA) reports, the fiscal deficit comes to around ₹17,33,131 crore. This is lower than the revised estimate by Rs 22,188 crore. This is largely due to increased tax revenues that were not expected. Even with higher revenue expenditure on subsidies and interest payments, the reduced deficit was seen as a good sign of tax buoyancy.
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According to Aditi Nayar, Chief Economist, and Head – Research and Outreach at ICRA Ltd, “The Government of India was able to restrict its FY2023 fiscal deficit at Rs. 17.3 trillion, a shade below the FY2023 RE, with higher than estimated revenue receipts and a small undershooting in revenue expenditure, offsetting the disinvestment miss and a healthier than expected capex.”
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