FM likely to try and pull fiscal deficit below 6% in 2023-24

As Union Finance Minister Nirmala Sitharaman prepares to present the last full budget of the NDA government before the 2024 Lok Sabha elections, she may try to focus on fiscal consolidation and bringing the fiscal deficit target down to less than 6 per cent of the GDP. On February 1, she may try to look at a fiscal deficit figure, which is much lesser than the 6.4 per cent of GDP, which was the target in the previous budget for 2022-23. In the previous two financial years, which were marred by the coronavirus pandemic, the deficit had touched almost the 10 per cent mark. Fiscal deficit helps in assessing macroeconomic stability of a nation, which also impacts inflation. Economists expect that the Finance Minister may keep the fiscal deficit target to around 5.5 per cent and 6 per cent in the forthcoming budget for 2023-24. Amid fluid geopolitical situation, economists feel that it would be a challenge for the government to keep on the path of fiscal consolidation. They added that India will have to grow at a faster pace to achieve the aim of fiscal consolidation, considering it may go bullish on expenditure and revenue mobilisation. Similarly, another area of focus in the budget would be tax collections, sources said. As businesses are gradually bouncing back after the pandemic-induced lockdowns were eased, direct tax collections have shown marked improvement. As per official data, during the current fiscal, direct tax collections showed good growth as they rose by 25 per cent to Rs 8.77 lakh crore on year-on-year basis till November 2022. Economists on their part feel that the forthcoming budget being the last full budget before the 2024 Lok Sabha elections, the government may introduce some tax-payer friendly measures. Also there could be measures which would ensure economic growth, keeping in mind the fact that economic recovery has just begun, they added.