We have been lot more prudent in managing fiscal deficit: FM Sitharaman

Finance Minister Nirmala Sitharaman on Wednesday told the Lok Sabha that the government has been very prudent in managing the fiscal deficit to keep it a notch below than expected for the current and the next financial year.

“We have been a lot more prudent and managed it efficiently, therefore we were able to reach 5.8 instead of 5.9 per cent this year itself. And instead of reaching 5.2 per cent next year, as per the glide path we have made sure that we will be one notch down at 5.1 per cent,” Sitharaman said.

The fiscal glidepath announced by the government has set the fiscal deficit target at 5.8 per cent of Gross Domestic Product (GDP) for financial year 2024 (FY24) and at 5.1 per cent of GDP for financial year 2025 (FY25).

The finance minister in her address also highlighted that there had been no reduction in allocations for major flagship schemes, important heads, and capital formation in the Budget of FY2024-25. “Nowhere has there been a reduction, on the contrary, it is only an increase compared to Budget estimates,” the FM said.

She said that the allocation this year for various heads such as health and family welfare, school education and literacy, minority affairs, ministry of women and child welfare is higher for FY25 compared to FY24.

Sitharaman highlighted that the outlay for capital expenditure for FY25 has been kept at Rs 11 lakh crore, which is 17 per cent higher than the revised estimate for FY 2023-24. “This outlay is higher than the projected GDP growth rate of 10.5 per cent,” Sitharaman said.

The allocation for main and important heads is, if anything, more rather than lower than the previous year, the FM said.

The FM also highlighted that major capital allocations, including to ministries of road, transport and highways, defence, have gone up. The state's capex loan scheme, which is interest-free 50-year loans of Rs 1,30,000 crore, has been retained at that level in the FY25 budget.

Allocation of major flagship schemes has either remained the same or gone up compared to budget estimates, Sitharaman said.

Compared to the revised estimates, the Interim Budget indicates a 6 per cent decrease for 37 major welfare schemes, amounting to Rs 4.41 trillion in FY24 compared to the budget estimate of Rs 4.69 trillion. There is a 14 per cent increase in allocations for these schemes in FY25, reaching Rs 5.03 trillion over the RE of FY24.

The FM also said that retail inflation had declined from an average of 6.8 per cent in April-December 2022 to 5.5 per cent in the corresponding period of April-December 2023.

“The retail inflation is now stable and within the notified tolerance span of 2 to 6 per cent,” the FM said.

Sitharaman also said that India has set a clear path for achieving sustainable development goals stipulated to be achieved by 2030, as the multidimensional poverty index has nearly halved from 0.117 to 0.066 in the 2019-2021 period. “The largest improvements were reported in the states like Bihar, Madhya Pradesh, Uttar Pradesh, Odisha, and Rajasthan, with rural areas staring at a fall in the incidence of poverty.

The FM was responding to discussions on the budget 2024-25, second supplementary demand for grants, among other matters.