Centre to better medium term target for fiscal deficit
₹2.11 trillion Reserve Bank of India dividend, up 141% from the previous year. The Centre had set a fiscal deficit target of 5.9% in FY24, 5.1% in FY25 and 4.5% in FY26. It revised the target for FY24 in the interim budget in February, only to beat it thanks to higher-than-anticipated receipts and lower-than-estimated revenue spending.
During FY24, the government received ₹27,88,872 crore (101.2% of corresponding revised estimates of total receipts). The total expenditure incurred by the central government was ₹44,42,542 crore (98.9% of corresponding revised estimates). Of this, ₹10,63,871 crore was used for interest payments and ₹4,13,542 crore for major subsidies.
Experts said the Centre's interest payment may reduce in the next couple of years thanks to the additional RBI dividend as it pays off some of the public debt. “The RBI has indicated that the higher dividend trend will continue next year, which will help provide cushion to better the 5.1% fiscal deficit target for FY24. Meanwhile, the non-tax revenue has shown surprise in FY24, and we expect positive surprises in the next couple of years largely from asset monetization and divestment.
On the tax side, we are seeing surprise buoyancy in GST, which is expected to continue," said N.R. Bhanumurthy, vice-chancellor at Dr. B.R.
Ambedkar School of Economics University, Bengaluru. “These factors should help the Centre better its fiscal deficit target. However, I am of the view that the glide path shouldn't take fiscal deficit but public debt to GDP into account.
Read more on livemint.com
