Union Finance Minister Nirmala Sitharaman on Thursday set the fiscal deficit target for 2024-25 at 5.1% of GDP while presenting the interim Budget 2024-25 in Parliament. Additionally, Sitharaman revealed a revised fiscal deficit figure of 5.8% for the fiscal year 2023-24, marking a downward revision from the government’s initial projection of 5.9% made last year.
The fiscal deficit represents the variance between total government revenue and expenditure, serving as an indicator of potential borrowings. The government aims to reduce the fiscal deficit to below 4.5% of GDP by the fiscal year 2025-26.
Providing relief to citizens, the central government opted not to modify or increase tax burdens. Sitharaman said, “I do not propose to make any changes related to taxation and propose to retain the same tax rates for direct and indirect taxes, including import duties.”
However, tax benefits for start-ups, investments by sovereign wealth or pension funds, and certain income exemptions for IFSC units, set to expire on March 31, 2024, will be extended until March 31, 2025.
The government proposed an 11.1% increase in the capital expenditure outlay to Rs 11.11 lakh crore in 2024-25. Capital expenditure, used to establish long-term physical or fixed assets, is a crucial element in the government’s strategy to boost growth potential, job creation, attract private investments, and provide a buffer against global uncertainties.
In the previous fiscal year, the government proposed a 33% increase in the capital expenditure outlay to Rs 10 lakh crore in 2023-24, constituting 3.3% of the GDP. The significant boost in capital expenditure aligns with the government’s efforts to stimulate growth, encourage private investments, and cushion against global challenges.
(Inputs from ANI)