Finance minister Nirmala Sitharaman's eighth budget in eight charts
Subscribe to enjoy similar stories. Nirmala Sitharaman had an unenviable task of boosting economic growth without compromising the fiscal consolidation efforts of the government when she presented her record eighth consecutive budget on Saturday. The finance minister has tried to balance the two conflicting objectives. This is how she managed to pull it off: Faced with a sharp fall in urban consumption which dragged economic growth down in the second quarter of this fiscal to just 5.4% of the gross domestic product (GDP) compared to 8.2% in the same period last year, the finance minister had to act, and she decided to take the bull by its horns.
She cut personal income tax sharply to leave as much as ₹1 trillion in the hands of the people in the hope that people will spend, thereby boosting consumption and eventually, GDP growth. Consumption, according to the Economic Survey, accounts for 62% of the GDP. Read this | Budget 2025 | A ₹1 trillion largesse for India's middle class While presenting the 2021-22 budget, the finance minister had committed to reducing the fiscal deficit—then at 9.2% levels—as a share of GDP to 4.5% or below by 2025-26.
By pegging FY26 fiscal deficit at 4.4%, she has kept her word. In FY25, the government achieved a fiscal deficit of 4.8%, lower than the budgeted 4.9%, thanks to buoyant tax collection and lower than expected capex spending. Read this | Budget 2025 math: How the government plans to cut fiscal deficit this year From FY27, the government has said that fiscal consolidation will be anchored around debt and not fiscal deficit.
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