New Delhi: Ajay Seth, the Economic Affairs Secretary, stated on Wednesday that the Budget has considered a moderate nominal GDP growth rate of 10.5 percent, as a higher rate could have resulted in a larger fiscal deficit.
When considering the present year, we are required to be cautious and practical in estimating potential revenues and also ensure sufficient funding for important government priorities. He mentioned in a post-Budget interview with PTI that this Budget achieves that. He mentioned a increased provision of about Rs 90,000 crore, including funds for new programs, between the previous Budget and this one. He mentioned that 10.5 percent is a realistic prediction for the economy's nominal growth. If we make bigger assumptions, we would need to expect more revenue to come in. If that revenue doesn't materialize, we would have a larger fiscal deficit.
He mentioned that having more borrowings leads to its own issues and it's preferable to use cautious predictions. Due to better revenue collection, the government has reduced the fiscal deficit target to 4.9 percent for this financial year, down from the 5.1 percent projected in the interim Budget in February.
Nevertheless, the Budget maintained the fiscal deficit projection at 4.5 per cent for 2025-26 as declared in February. The fiscal deficit has decreased to Rs 16.14 lakh crore from the earlier estimate of Rs 16.85 lakh crore for the current financial year in absolute terms.
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