Interim Budget must put India quickly back on fiscal glidepath if it derails
Interim Budget: India's fiscal deficit might surpass the government's 5.9% target for FY24 due to escalated revenue expenses and a lower-than-expected nominal GDP, according to India Ratings and Research. The agency predicts that despite increased tax and non-tax revenue, an anticipated second supplementary demand for grants could escalate the deficit to 6% of GDP, slightly exceeding the budgeted limit.
“Higher-than-budgeted revenue expenditure triggered through the first and likely second supplementary demand for grants in combination with lower-than-budgeted nominal GDP will push the fiscal deficit to 6.0% of GDP, 10bp higher than budgeted 5.9%,” said Ind-Ra researchers.
While announcing the federal budget for this fiscal year, Finance Minister Nirmala Sitharaman said India aims to narrow the fiscal gap to 5.9% of gross domestic product from 6.4% in the last financial year.
There are mushrooming speculations that the Narendra Modi-led government will soon have to unleash various fiscal measures and particularly so as to rein in galloping inflation rate.
India's fiscal deficit for the first seven months of this fiscal year through October stood at 8.037 lakh crore rupees, or 45% of annual estimates, government data showed today. The fiscal deficit marginally narrowed from 45.6% reported in the comparable year-earlier period.
Interim Budget 2024: Types of deficits and how they are calculated
Total receipts stood at 15.91 lakh crore rupees, while overall expenditure in April to October was at 23.94 lakh crore rupees. They were 58.6% and 53.2% of this fiscal year's budget target.
This year, non-tax revenue jumped as the Reserve Bank of India approved the transfer of Rs 87,416 crore as surplus to
