Context: Finance Minister Nirmala Sitharaman is set to present the 2025-26 Budget on February 1, and the government is committed to reducing the fiscal deficit to 4.5% of GDP by FY2026.
Relevance: GS 3 ( Budget,Economy)
- Fiscal Deficit Reduction: The government’s goal is to reduce the fiscal deficit to 4.5% of GDP by FY2026, continuing the fiscal consolidation efforts started in FY2021–22.
- Focus on Quality Spending: The government will prioritize improving the quality of public spending, while simultaneously strengthening the social security net for the poor and vulnerable.
- Macroeconomic Stability: This strategy aims to bolster India’s macroeconomic fundamentals and ensure overall financial stability despite ongoing global uncertainties.
- Growth with Fiscal Consolidation: India’s strong macroeconomic fundamentals helped shield it from global risks, allowing the country to maintain growth while pursuing fiscal consolidation.
- Expenditure Estimates: The 2024-25 Budget estimates total expenditure of ₹48.21 lakh crore, with about ₹37.09 lakh crore allocated for revenue account and ₹11.11 lakh crore for capital account.
- Capital Expenditure (Capex): The effective capital expenditure for 2024-25 is projected at ₹15.02 lakh crore, including grants for the creation of capital assets.
- Fiscal Deficit for 2024-25: The fiscal deficit for 2024–25 is pegged at ₹16.13 lakh crore, or 4.9% of GDP. In the first half of FY25, the fiscal deficit is estimated at ₹4.75 lakh crore (29.4% of the budgeted figure).
