In the 2023 Union Budget speech, Nirmala Sitharaman, the Finance Minister, stated that the central government anticipates reaching its fiscal deficit target for the current fiscal year of 6.4% of the Gross Domestic Product (GDP), and has set a goal to reduce it to 5.9% in the next fiscal year (FY24).
The Finance Minister emphasized her dedication to following the plan to reduce the fiscal deficit and to reach a target of below 4.5% by the fiscal year 2025-26.
The fiscal deficit occurs when a government’s expenses exceed its income and is the result of the difference between the two.
Finance Minister Nirmala Sitharaman stated that the government’s total spending for the fiscal year 24 will be 45 trillion rupees, which is an increase from the revised estimate for the fiscal year 23 of 41 trillion rupees and higher than the original budget estimate for the same year of 39 trillion rupees.
Finance Minister Nirmala Sitharaman announced that the central government will maintain its emphasis on capital expenditure for the upcoming fiscal year, with a budget allocation of 10 trillion rupees. This represents a significant increase from the revised estimate of 7.3 trillion rupees for the previous fiscal year and higher than the original budget estimate of 7.5 trillion rupees for the same period. To support state governments’ capital expenditure needs, the central government will provide 50-year interest-free loans, with increased support of 30,000 crores for the upcoming fiscal year, bringing the total allocation to 1.3 trillion rupees.
For the upcoming fiscal year 24, the government projects an increase in its non-borrowed total receipts to 27.2 trillion rupees. This is higher than the current fiscal year’s revised estimate of 24.3 trillion rupees for the same category.
The Finance Minister, Nirmala Sitharaman, announced that states will be permitted a fiscal deficit of up to 3.5% of their Gross State Domestic Product (GSDP), with 0.5% of this amount linked to power sector reforms.