The Budget has estimated fiscal deficit to be 6.4 per cent of GDP (Gross Domestic Product). At the same time, the government reiterated its commitment to bring down the deficit below 4.5 per cent within the next four years.

Presenting her fourth Budget, Finance Minister Nirmala Sitharaman said the revised fiscal deficit in the current year is estimated at 6.9 per cent of GDP as against 6.8 per cent projected in the Budget Estimates. The fiscal deficit in 2022-23 is estimated at 6.4 per cent of GDP, which is consistent with the broad path of fiscal consolidation announced last year to reach a fiscal deficit level below 4.5 per cent by 2025-26.

“While setting the fiscal deficit level in 2022-23, I am conscious of the need to nurture growth, through public investment, to become stronger and sustainable,” she said. However, there is no proposal to bring any amendment in the Fiscal Responsibility and Budget Management (FRBM) Act for FY2023-24 and FY2024-25.

In terms of market borrowing, the Central Government has planned gross and net borrowings through dated securities of about ₹14.95 lakh crore and ₹11.09 lakh crore, respectively, in BE 2022-23. This amount is 24 per cent higher than gross borrowings of ₹12.05 lakh crore planned in BE 2021-22. “The increase is on account of higher loan repayments in FY 2022-23 and change in fiscal deficit in nominal terms,” the Budget document said.

NSSF investments

Other sources of financing fiscal deficit are NSSF investments in special securities of the Central Government, short term treasury bills, net external assistance and the public account balances etc. For financing fiscal deficit in BE 2022-23, borrowing from NSSF is estimated at about ₹4.25 lakh crore; whereas, those from external sources and State Provident Funds are estimated at ₹0.19 lakh crore and ₹0.20 lakh crore, respectively.

Talking about fiscal strategy, the Statement of Fiscal Policy said priorities for FY23 rests on the principle of continuing on the path of gradual fiscal consolidation while retaining flexibility necessary to effectively respond to the prevailing economic conditions. Fiscal strategy of the government is based on directing increased resources towards capital spending to sustain infrastructure development momentum, focus on integrated and coordinated planning and implementation of infrastructure projects in the country, embracing the principles of PMGatiShakti, prioritisation of expenditure towards the key developmental sectors, and mobilise larger amount of resources by enhancing tax buoyancy, beside others.

The statement further added that in line with the commitment made in the budget for FY2021-22, the Government would pursue a broad path of fiscal consolidation to attain a level of fiscal deficit lower than 4.5 per cent of GDP by FY2025-26. “The Government would continue with its efforts to attain sustained, broad based economic growth, and take such measures as may be necessary to protect the lives/ livelihoods of the people, while adhering to the path of fiscal rectitude,” it said.

Overall Budget Size

With higher expenditure on fertiliser and to repay for Air India liabilities, size of the budget has gone up for the current fiscal To ₹37.70 lakh crore as against original size of ₹34.83 lakh crore. “The Revised Estimate of capital expenditure is ₹6.03 lakh crore. This includes an amount of ₹51,971 crore towards settlement of outstanding guaranteed liabilities of Air India and its other sundry commitments,” Sitharaman said while adding that Budget size for FY23 would be ₹39.45 lakh crore.

comment COMMENT NOW