{"id":44517,"date":"2025-05-31T20:51:03","date_gmt":"2025-05-31T15:21:03","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=44517"},"modified":"2025-05-31T20:52:04","modified_gmt":"2025-05-31T15:22:04","slug":"government-achieves-fiscal-deficit-target-fy25","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/31-05-2025\/government-achieves-fiscal-deficit-target-fy25","title":{"rendered":"Government Achieves Fiscal Deficit Target of 4.8% for FY25"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Government of India has successfully met its <strong>fiscal deficit target of 4.8% of GDP<\/strong> for the financial year <strong>2024-25,<\/strong> as per provisional data released by the Controller General of Accounts (CGA).<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Highlights of the FY25 Fiscal Performance<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In 2024\u201325, the Government of India recorded a fiscal deficit of<strong> \u20b915.77 lakh crore, <\/strong>which amounted to <strong>4.8%<\/strong> of the GDP, in line with its revised estimates.<\/li>\n\n\n\n<li>The central government\u2019s total revenue stood at<strong> \u20b930.78 lakh crore.<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Net tax revenue<\/strong> amounted to <strong>\u20b924.99 lakh crore<\/strong>, which was 97.7% of the government\u2019s target.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The government earned <strong>\u20b910,131 crore from disinvestment<\/strong> of public sector undertakings in 2024\u201325.\n<ul class=\"wp-block-list\">\n<li>This contributed to the miscellaneous capital receipts but remained far below the target.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Total government expenditure<\/strong> stood at \u20b946.55 lakh crore, which was 97.8% of the revised estimate.\n<ul class=\"wp-block-list\">\n<li><strong>Capital expenditure,<\/strong> which refers to spending on long-term assets like infrastructure, reached \u20b910.52 lakh crore.\u00a0<\/li>\n\n\n\n<li><strong>Revenue expenditure<\/strong> stood at \u20b936.03 lakh crore.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is the fiscal deficit?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Fiscal Deficit is defined as excess of total budget expenditure (revenue and capital) over total budget receipts (revenue and capital) excluding borrowings during a fiscal year.<\/li>\n\n\n\n<li>Fiscal Deficit = Total Expenditure \u2013 (Revenue Receipts + Non-Debt Creating Capital Receipts).<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Implications of fiscal deficit<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Inflationary Pressure:<\/strong> Persistently high fiscal deficits lead to inflation as governments resort to central bank-issued money to finance the deficit.<\/li>\n\n\n\n<li><strong>Crowding Out effect:<\/strong> When the government borrows a large portion of available funds from financial markets to finance its deficit, it crowds out private investment with reduced access to credit for businesses and individuals.\u00a0<\/li>\n\n\n\n<li><strong>Reduced Fiscal Space: <\/strong>A high fiscal deficit limits the government&#8217;s ability to respond to economic shocks or crises.\u00a0<\/li>\n\n\n\n<li><strong>Difficulty in borrowing:<\/strong> As a government\u2019s finances worsen, demand for the government\u2019s bonds begins to drop, forcing the government to offer to pay a higher interest rate to lenders.\u00a0<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Benefits of lower fiscal deficit<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Improved Credit Ratings:<\/strong> Consistent deficit reduction enhances international credit ratings, lowering borrowing costs in global markets.<\/li>\n\n\n\n<li><strong>Reduced Debt Servicing: <\/strong>Less spending on interest payments frees funds for development projects like infrastructure, education, and healthcare.<\/li>\n\n\n\n<li><strong>Improved Balance of Payments:<\/strong> Lower reliance on foreign borrowing stabilizes the exchange rate and current account.<\/li>\n\n\n\n<li><strong>Enhanced Investor Confidence:<\/strong> Signals fiscal discipline, attracting greater foreign and domestic investments.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>NK Singh committee recommendation<\/strong><br>&#8211; <strong>Debt to GDP ratio: <\/strong>The Committee suggested using debt as the primary target for fiscal policy. A debt to GDP ratio of<strong> 60%<\/strong> should be targeted with a <strong>40%<\/strong> limit for the center and <strong>20% <\/strong>limit for the states by FY23.<br>&#8211; <strong>The fiscal deficit to GDP ratio<\/strong> of <strong>2.5%<\/strong> by FY23.<br>&#8211; <strong>Fiscal Council: <\/strong>The Committee proposed to create an autonomous Fiscal Council with a Chairperson and two members appointed by the center. The role of the Council would include:<br>1. Preparing multi-year fiscal forecasts,\u00a0<br>2. Recommending changes to the fiscal strategy,\u00a0<br>3. Improving quality of fiscal data,\u00a0<br>4. Advising the government if conditions exist to deviate from the fiscal target.<br>&#8211; <strong>Deviations: <\/strong>The Committee suggested that grounds in which the government can deviate from the targets should be clearly specified, and the government should not be allowed to notify other circumstances.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/incoming\/govt-meets-48-fiscal-deficit-target-for-2024-25\/article69638354.ece#:~:text=meets%204.8%25%20fiscal%20deficit%20target%20for%202024-2\" rel=\"nofollow noopener\" target=\"_blank\"><strong>TH<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">The Government of India has successfully met its fiscal deficit target of 4.8% of GDP for the financial year 2024-25, as per provisional data released by the Controller General of Accounts (CGA).<\/li>\n<p><\/p>\n<h3><strong>What is the fiscal deficit?<\/strong><\/h3>\n<li class=\"ms-5\">Fiscal Deficit is defined as excess of total budget expenditure (revenue and capital) over total budget receipts (revenue and capital) excluding borrowings during a fiscal year.<\/li>\n<li class=\"ms-5\">Fiscal Deficit = Total Expenditure \u2013 (Revenue Receipts + Non-Debt Creating Capital Receipts).<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/31-05-2025\/government-achieves-fiscal-deficit-target-fy25\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-44517","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/44517","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=44517"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/44517\/revisions"}],"predecessor-version":[{"id":44532,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/44517\/revisions\/44532"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=44517"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=44517"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=44517"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}