The government is focused on improving the quality of public spending, strengthening the social safety net and reducing the fiscal deficit to 4.5% of GDP by FY26, according to a Finance Ministry report .

Finance Minister Nirmala Sitharaman will present the budget for the financial year 2025-26 in Parliament on February 1.

The Union Government remains committed to following the fiscal consolidation path outlined in the Budget for the financial year 2021-22, with the aim of bringing the fiscal deficit below 4.5 per cent of GDP by the financial year 2025-2026, according to the Finance Ministry’s statements on the half-yearly review of the Union Budget. revenue and expenditure trends and gaps in meeting government obligations under the Financial Responsibility and Budget Management Act, 2003.

This review also looked at any deviations from the Fiscal Responsibility and Budget Management Act 2003. The statements were presented in the Lok Sabha last week.

The report highlights that emphasis will be placed on improving the quality of public spending while strengthening the social security system for vulnerable groups. This approach is expected to improve the country’s macroeconomic fundamentals and maintain overall financial stability.

The statements noted that the budget for 2024-2025 was formulated against a backdrop of global uncertainties, including ongoing conflicts in Europe and the Middle East. However, India’s strong macroeconomic fundamentals have insulated the country from global economic turmoil, allowing it to continue its growth while maintaining fiscal discipline.

“It also helped the country continue to grow through fiscal consolidation. As a result, India maintains its pride of place among the world’s fastest growing economies. However, risks to growth remain,” he said.

The total estimated expenditure for the financial year 2024-25 is around Rs 48.21 lakh crore, with Rs 37.09 lakh crore allocated for revenue and Rs 11.11 lakh crore for capital expenditure, according to the budget estimate (BE). In the first half of FY25, the government spent Rs 21.11 lakh crore, or about 43.8% of the BE.

Including subsidies for creation of capital assets, the effective capital expenditure (capex) has been projected at Rs 15.02 lakh crore. The gross tax revenue (GTR) was estimated at Rs 38.40 lakh crore, giving a tax-to-GDP ratio of 11.8 per cent.

The Centre’s total non-debt revenue was estimated at Rs 32.07 lakh crore, comprising Rs 25.83 lakh crore in net tax revenue, Rs 5.46 lakh crore in non-tax revenue and Rs 0.78 lakh crore in miscellaneous revenue. in capital.

Based on these estimates, the fiscal deficit for the financial year 2024-25 was projected at Rs 16.13 lakh crore, or 4.9 per cent of GDP. In the first half of FY25, the fiscal deficit was estimated at Rs 4.75 lakh crore, around 29.4% of the estimate for the full year.

The fiscal deficit is expected to be financed by Rs 11.13 lakh crore raised from the market (government securities and treasury bills) and the remaining Rs 5 lakh crore from other sources such as the National Small Savings Fund (NSSF), the State provident fund, external funds. debt and drawing down cash balances.