Global ratings agency Fitch estimate, that the fiscal deficit will reach 5.4% of the GDP in FY25, more than the government’s target of 5.1% announced by Finance Minister Nirmala Sitharaman in the interim budget.

Economy Business

Global ratings agency Fitch estimate, that the fiscal deficit will reach 5.4% of the GDP in FY25, more than the government’s target of 5.1% announced by Finance Minister Nirmala Sitharaman in the interim budget. Fitch termed the government’s decision to lower the fiscal deficit target for FY24 to 5.8% of the GDP from 5.9% as a “modest change". The deficit target of 5.1% in FY25 would keep the government on track to reach its goal of shrinking the deficit to 4.5% in FY26. The 11% increase in capital expenditure for FY25, if implemented as planned, could achieve real GDP growth of 6.5%. The continued emphasis on capex investment, with a further 11 percent spending increase, should remain supportive of the growth outlook in 2024-25, when real GDP growth is expected at 6.5 percent.


      The government has a recent record of achieving fiscal targets, but Fitch’s latest forecast is that the deficit will reach 5.4 percent of GDP in 2024-25, above the budget’s target.

      In 2023-24, the government pegged the fiscal deficit target for 2023-24 at 5.9 percent of gross domestic product (GDP).

      The government intends to bring the fiscal deficit below 4.5 percent of GDP by the financial year 2025-26.

 

     


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