Fiscal deficit target of 5.1% ambitious but achievable: Fin Secy

NEW DELHI: Finance Secretary TV Somanathan has said the government’s resolve to bring down the fiscal deficit by 70 basis points to 5.1 per cent in 2024-25 is ambitious but achievable in view of the tax buoyancy and expenditure management.

Finance Minister Nirmala Sitharaman in the interim Budget presented on Thursday refrained from announcing any populist measures but significantly trimmed the fiscal deficit to 5.1 per cent of the Gross Domestic Product (GDP) next fiscal and 4.5 per cent in FY26.

“So it is ambitious but it is also realistic. There are three pillars on which this is based. One is we have assumed growth in tax revenue about 11.5 per cent. I think that’s a very realistic assumption,” Somanathan said..Besides, he said, the government has projected a slight increase in non-tax revenue from a high base during the current financial year.

On the expenditure side, he said, ''Capex has increased 11.1 per cent... the revenue expenditure we believe is realistically projected. We have been helped by the fact that some of our subsidies have not grown and whether it is food or fertiliser. Both of them are either stagnant or slightly declined. Fertiliser is assisted by decline in commodity prices globally.''

''The government has projected the fertiliser subsidy of Rs 1.64 lakh crore for the next financial year as against Rs 1.88 lakh crore allocated for the current fiscal. Similarly, food subsidy outgo will come down to Rs 2.05 lakh crore compared to Rs 2.12 lakh crore for the current fiscal. “On the basis of three parts, reasonable revenue growth and reasonable increase in non-tax revenue that is tight control over avoidable expenditure and an optimal balanced increase in capital expenditure we are quite confident that we will achieve this (fiscal deficit target of 5.1 per cent of GDP),'' he said.