On a more encouraging note, India’s fiscal deficit for the year ending March 31, 2024, stood at 5.6% of the Gross Domestic Product (GDP), slightly below the proposed target of 5. 8%. This was achieved through a marginal reduction in expenditure, as per the figures released by the government on Friday.
Fiscal Deficit Details
The fiscal deficit, which was Rs 16. 54 lakh crore, which accounted for 95.3% of the estimated amount. This is especially notable given that the government has incurred record infrastructure spending to support the economy. The deficit was managed well despite high capex indicating high levels of fiscal responsibility.
Strong Economic Performance
The Indian economy demonstrated sustained high growth with an 8.2 percent growth in FY24, according to the recent Gross Domestic Product figures. This is an improvement from the previous fiscal year and shows the strength of the Indian economy in the face of global challenges.
Revenue and Expenditure Highlights
Net Tax Receipts: Net tax collections were even higher, coming to Rs 23. 27 lakh crores, which is 100.01 percent of the target for the year. This increase in tax receipts was very useful in the management of the fiscal deficit.
Total Expenditure: The total government expenditure of the year was Rs 44. 43 lakh crore or ninety-nine percent of the targeted expenditure. This approach to spending helped to keep the fiscal deficit below the expected level.
Capital Spending on Infrastructure
The government’s capital expenditure on infrastructure projects was significant, touching Rs 9.49 lakh crore. This investment is part of a larger plan to foster economic growth by improving infrastructure, which is critical to sustainable economic growth.
Fiscal Outlook and Future Targets
For the future perspective, the Centre plans to continue the deficit reduction and set the fiscal deficit level at 4.5% by 2025-26. For the current financial year a fiscal deficit target of 5.1 percent of the GDP has been set for the country. There is optimism that a much narrower deficit can be achieved as supported by a surprise Rs 2.11 lakh crore dividend transfer from the Reserve Bank of India (RBI) to the government earlier this year.
India has also demonstrated efficient fiscal policies that enable it to manage its fiscal deficit well while achieving high economic growth. These are evident from the higher-than-projected tax collections and the ability of the government to contain its expenditures. While the country goes on to develop infrastructure and other sectors, achieving this balance is necessary for economic growth and other fiscal goals.