Budget 2024: India Aims To Lower Debt-To-GDP Ratio Below 4.5% By Next Fiscal
The metric had surged owing to the Covid-19 pandemic, said Economic Affairs Secretary Ajay Seth.
India aims to reduce its debt-to-gross domestic product ratio to below 4.5% by the year ended March 2026 as it focuses on fiscal prudence and builds buffers for future crises, Ajay Seth, secretary of the Department of Economic Affairs, said.
Speaking at a panel discussion hosted by NDTV Profit at the Confederation of Indian Industry in Delhi on Tuesday, Seth said the government has made significant progress on this count and “substantial efforts” are on for next year to achieve the goal. The metric, he said, had surged owing to the Covid-19 pandemic.
He expressed optimism about tax revenue receipts, which had exceeded estimates from four months ago, and said the dividend from the Reserve Bank of India was higher than anticipated. These factors would help prioritise essential expenditures and reduce the fiscal deficit, Seth said.
“Reduced government borrowing would free up funds for the financial markets, enabling more credit for the private sector,” he said.
Seth pointed out that the government’s current capital expenditure stands at 3.4% of the gross domestic product, a multi-decadal high.
The budget aims to continue supporting key sectors while balancing fiscal consolidation and other priorities, said Seth. He reminded the audience that with eight months left in the financial year by the time the budget is passed, timely execution would be crucial.
Seth addressed the concept of green taxonomy, noting the budget's commitment to establishing Indian standards tailored to local conditions.
He said the taxonomy would define mitigation and adaptation strategies, asset classes, investment measurement, and outcome assessment. This transparency would enhance market efficiency and investor confidence, he said.
On the administration of the venture capital fund for the private sector, Seth mentioned that while details were still being worked out, several models were under consideration, including blended finance, where the government picks up a portion of the fund.
Seth hinted at upcoming announcements related to the green economy, expected in the third quarter of the ongoing financial year.
Vivek Joshi, secretary of the Department of Financial Services, spoke about the conditions for borrowers under the Tarun loan scheme, stating that only those who have repaid their loans satisfactorily would be eligible for further credit.
This, he said, ensured that borrowers with proven creditworthiness would benefit, promoting healthy lending practices.
