In the current fiscal, the Union government remains committed to its path of fiscal consolidation, targeting a fiscal deficit of 4.9% of GDP. Finance Minister Nirmala Sitharaman emphasised that while achieving a specific deficit number is crucial, it is not the sole focus.
She highlighted that merely reducing debt is a viable route to managing fiscal deficit, but it has its limitations.
"Reducing the debt is an obvious route for any country, but you need to borrow, especially for a growing economy," Sitharaman told NDTV. The key is to ensure that borrowing translates into asset creation rather than just debt clearance, she said.
Sitharaman highlighted the importance of a balanced approach, for not just meeting fiscal targets but also considering how borrowing impacts overall economic health.
According to her, it was decided to not just focus on the numbers but also on ways to reduce debt without affecting growth, desires and aspirations after various discussions.
The Union government in the budget revised the fiscal deficit from the earlier 5.1% set in the interim budget.
While the gross borrowing is pegged at Rs 14.13 lakh crore, as estimated in the interim budget, the net borrowing is pegged at Rs 11.63 lakh crore. Sitharaman during the budget had also reaffirmed that the government would continue on the path of fiscal consolidation, reaching a fiscal deficit below 4.5% by financial year 2026.
Sitharaman also confirmed that the Income Tax Regime Committee will deliver its report within six months. This report is expected to provide recommendations on potential reforms to streamline and enhance the income tax system.
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