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The government under Prime Minister Narendra Modi should focus on adherence to fiscal prudence and continue on the fiscal consolidation path, suggested SBI Research ahead of the much-awaited full Budget for 2024-25 to be tabled on July 23 - the first Budget under Modi 3.0.
The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings that may be needed by the government. SBI Research suggested that the government should target a fiscal deficit of 4.9 per cent, but it must not obsess too much over the fiscal stance. The government intends to bring the fiscal deficit below 4.5 per cent of GDP by the financial year 2025-26. In the Interim Budget earlier this year, the government has targeted a fiscal deficit of 5.1 per cent of GDP for 2024-25. However, on the back of a stupendous growth in GST revenues along with higher dividends from PSUs and RBI, SBI Research believes that government may budget fiscal deficit of less than 5 per cent -- may be 4.9 -- for 2024-25. "As the budgeted fiscal deficit gets lowered, gross market borrowing of the government will also reduce to around Rs 13.5 lakh crore in FY25 compared to Rs 14.1 lakh crore in the interim budget and net market borrowing to Rs 11.1 lakh crore against Rs 11.8 lakh crore earlier," the SBI Research report, authored and led by Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said. "This along with India's inclusion in Global Bond indices will keep the yield curve movements anchored," it added. In 2023-24, the government had pegged the fiscal deficit target for 2023-24 at 5.9 per cent of gross domestic product (GDP). Later, it was downwardly revised to 5.8 per cent. The interim budget, tabled on February 1, took care of the financial needs of the intervening period until a government was formed after the Lok Sabha polls, after which a full budget was supposed to be presented by the new government in July. With this upcoming Budget Presentation, Sitharaman surpassed the record set by former Prime Minister Morarji Desai, who as finance minister, presented five annual budgets and one interim budget between 1959 and 1964. Sitharaman's upcoming Budget speech would be her sixth. The government on Saturday announced the dates of the budget session of Parliament which will start on July 22 and conclude on August 12. (ANI)
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