Government commits to reducing fiscal deficit to less than 4.5 % by 2025—2026

2 Aug 2022 , 10:01 AM

Pankaj Chaudhary, a minister of state for finance, stated on August 1 that the government is committed to reducing its budget deficit to less than 4.5 percent of the gross domestic product by the fiscal year 2025—26.

According to Chaudhary’s written statement in the Lok Sabha, “in keeping with the pledge made in the budget for FY 2021-22, the government is determined to achieve fiscal consolidation to attain a level of fiscal deficit lower than 4.5 percent of GDP by FY 2025-26.”

In the wake of the coronavirus epidemic, the Centre’s budget deficit grew significantly and income decreased. Although the deficit has decreased and the economy is back on track, it is still high. In the current fiscal year, the Center plans to issue bonds to borrow a record Rs 14.95 lakh crore from the market. It aims to have a budget deficit of 6.4%.

In FY22, the budget deficit was 6.7% of GDP, 20 basis points less than the updated objective of 6.9%. One-tenth of a percentage point is referred to as a basis point. According to figures issued on July 29 by the Controller General of Accounts, the fiscal deficit for the four months of April through June was Rs 3.52 lakh crore or 21.2 percent of the full-year target.