Economy towards financial strengthening, growth rate will increase due to reduction in fiscal deficit

Economy towards financial strengthening : The government is now focussing on strengthening the financial health affected due to the corona pandemic. Under the Financial Responsibility and Budget Management (FRBM) Act, the government appears to be committed to reducing its fiscal deficit while reducing the total debt ratio.

The ratio of debt will also depend on the growth rate of GDP

The budget aims to bring the debt ratio to 51 per cent of GDP by FY 2030-31. The loan ratio in the current financial year is estimated to be 57.1 per cent. However, the debt ratio will also depend on the growth rate of GDP.

If the GDP growth rate at current prices is 11 percent in the next five years, the debt ratio could go up to 48 percent of GDP in FY 2030-31. A reduction in debt and an increase in revenue will lead to a steady reduction in the fiscal deficit.

The central government’s debt is estimated to be 56.1 percent of GDP

The fiscal deficit is estimated to be 4.8 per cent of GDP in the current fiscal and 4.4 per cent in the upcoming fiscal year 2025-26. The central government’s debt is estimated to be 56.1 per cent of GDP in the next financial year.

According to the budget announcement, the total tax revenue in the coming financial year is estimated to be Rs 42.70 lakh crore, which is 10.8 per cent higher than the revised estimate for the current financial year. Out of Rs 42.7 lakh crore, Rs 25.20 lakh crore is estimated to come from direct taxes.

Credit markets should benefit from fiscal management

According to Debopam Chaudhary, chief economist at Piramal Enterprises, credit markets should benefit from fiscal management of the budget. Growth is expected to be 6.8 per cent or less in FY20. The central government’s fiscal deficit is estimated to be 4.4 per cent.

No other major economy after Corona has been able to reduce the fiscal deficit at this pace. India’s position has been strengthened. The tax cut has provided additional income to India’s vast middle class and aspiring population.

Rs 3,481.27 crore allocated for development and security in Naxal affected areas

In the Union Budget, Rs 3,481.27 crore has been allocated for security related expenditure (SRE) and special infrastructure scheme for Naxal-affected areas, as the Centre has set a target of March 2026 to end the Naxal problem. An amount of Rs 2,463.62 crore was allocated under this item in the budget of 2024-25.