The Centre will target a narrower fiscal deficit of 4.4 per cent of the gross domestic product (GDP) for the financial year 2025-26, down from a revised 4.8 per cent for the current year, Union finance minister Nirmala Sitharaman said in her budget speech in Parliament on Saturday.
The government increased the gross borrowing to ₹14.82 trillion from the market to fund the deficit, as compared to ₹14.01 trillion in the ongoing year.
The narrower deficit target comes despite a rejig of personal taxes, which will lead to a loss of 1 trillion rupees in revenue, Reuters reported.
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The net market borrowing will stand at 11.54 trillion rupees, marginally lower from 11.63 trillion rupees in 2024-25.
The government, which plans to shift to debt-to-GDP as the key benchmark for fiscal policy starting 2026-27, said it would target to bring down debt to a level of 50% by March 31, 2031 from a current level of 57.1%.
"Coming to 2025-26, the total receipts other than borrowings and the total expenditure are estimated at ₹34.96 lakh crore and ₹50.65 lakh crore respectively. The net tax receipts are estimated at ₹28.37 lakh crore," the minister said in her speech.
"To finance the fiscal deficit, the net market borrowings from dated securities are estimated at ₹11.54 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at ₹14.82 lakh crore," she said.
What it means?
{{/usCountry}}"To finance the fiscal deficit, the net market borrowings from dated securities are estimated at ₹11.54 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at ₹14.82 lakh crore," she said.
What it means?
{{/usCountry}}A narrower budget gap signals the government's intent to remain fiscally prudent despite expectations that it should have ramped up capital expenditure to support a sagging domestic economy, Reuters reported.
A lower fiscal deficit also boosts foreign investors' confidence in government finances and improves chances of a sovereign rating upgrade.
(With PTI, Reuters inputs)