Finance Minister Nirmala Sitharaman has resisted populism during the election year by capping the fiscal deficit to 5.8 percent during this fiscal and pegging it to 5.1 percent in the next fiscal backed by buoyancy in tax collections.
“We continue on the path of fiscal consolidation, as announced in my Budget Speech for 2021-22, to reduce fiscal deficit below 4.5 per cent by 2025-26. The fiscal deficit in 2024-25 is estimated to be 5.1 per cent of GDP, adhering to that path,” Sitharaman said in her Budget speech.
The gross and net market borrowings through dated securities during 2024-25 are estimated at Rs 14.13 and 11.75 lakh crore respectively. Both will be less than that in 2023-24. Now that the private investments are happening at scale, the lower borrowings by the Central Government will facilitate larger availability of credit for the private sector, she said.
Contrary to brokerages’ fears, the FM has upped the capital expenditure for the next fiscal by 11.1% to Rs 11.1 lakh crore.
RE tax receipts
Revised Estimate of the total receipts other than borrowings is Rs 27.56 lakh crore, of which the tax receipts are Rs 23.24 lakh crore. The Revised Estimate of the total expenditure is Rs 44.90 lakh crore.
The revenue receipts at Rs 30.03 lakh crore are expected to be higher than the Budget Estimate, reflecting strong growth momentum and formalization in the economy.
The Revised Estimate of the fiscal deficit is 5.8 per cent of GDP, improving on the Budget Estimate, notwithstanding moderation in the nominal growth estimates.
“Coming to 2024-25, the total receipts other than borrowings and the total expenditure are estimated at Rs 30.80 and Rs 47.66 lakh crore respectively. The tax receipts are estimated
at Rs 26.02 lakh crore. 83. The scheme of fifty-year interest free loan for capital expenditure to states will be continued this year with total outlay of Rs 1.3 lakh crore,” Sitharaman said in her Budget speech.
Tax status quo
Despite being an election year, the finance minister has refrained from tinkering with the direct tax rates, and stayed on the fiscal consolidation path.
“As for tax proposals, in keeping with the convention, I do not propose to make any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect
taxes including import duties. However, certain tax benefits to start-ups and investments made by sovereign wealth or pension funds as also tax exemption on certain income of some IFSC units are expiring on 1.03.2024. To provide continuity in taxation, I propose to extend the date to 31.03.2025,” Sitharaman said.
ETBFSI now has its WhatsApp channel. Join for all the latest updates.
