The government expects a fairly steady decline over the years. “We hope to achieve consolidation, first, by increasing the dynamism of tax revenue through better compliance and, second, by increasing income from monetization of assets, including public sector companies and land,” Sitharaman said while fixing the fiscal deficit for the current fiscal year at 9.5% of GDP in the revised estimate.
the Center It has estimated that the deficit will be 6.8% of GDP next year and gross market debt next year would be around 12 lakh crore rupees.
The government has said that its fiscal policy continues to be guided by the principle of gradual deficit reduction and a progressive movement towards fiscal consolidation.
“The government is fully aware of the need to maintain a strict fiscal plan. However, any fiscal inflexibility to comply with FRBM (fiscal responsibility and budget management) would not be advisable in light of the nation’s anticipated socioeconomic growth and prosperity amid ever-changing national and global scenarios and challenges. In the current context, the need for increased public spending is seen as crucial to provide the necessary boost economic growth“Said the Ministry of Finance in its statement of policy strategy and medium-term fiscal policy.
However, global rating agency Moody’s Investors Service expressed doubts about the government’s ability to achieve tax and monetization targets and noted the need to spend in key sectors.
“India’s new central government budget deficit target of 6.8% attempts to strike a balance between supporting growth and modest deficit reduction, but improvements in fiscal compliance and monetization targets can be difficult to achieve. achieve. At the same time, the government has limited space to cut spending without further weakening growth, and nominal GDP growth will continue to be critical to future deficit reduction, ”Moody’s said.
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