India Lowers Fiscal Deficit Target to 4.9% of GDP
Reduced from 5.1% in Interim Budget
Finance Minister: Fiscal Deficit to Drop to 4.5% by 2026
The Indian government has lowered its fiscal deficit target for the financial year ending March 2025 to 4.9% of GDP, down from 5.1% in the interim budget.
Finance Minister Nirmala Sitharaman announced the reduction in her Budget speech on Tuesday. She said that the government aims to bring the fiscal deficit down to 4.5% of GDP by 2026.
The Economic Survey released on Monday had projected that the fiscal deficit would decline to 4.5% of GDP by 2026. The survey noted that India's fiscal deficit had dropped from 9.3% of GDP in 2020-21 to 6.7% of GDP in 2021-22.
The government's decision to lower its fiscal deficit target is seen as a positive step towards fiscal consolidation. Fiscal consolidation refers to the process of reducing a government's budget deficit, typically by cutting spending or increasing taxes.
Fiscal consolidation can help to reduce interest rates, stabilize the economy, and improve the government's creditworthiness.
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